Defense Ministry Explained Need for Arms Import

21.12.2011 Russian defense ministry recourses to importing of arms in order to stimulate development of Russian defense products, said defense minister Anatoly Serdiukov in the interview to Rossiyskaya Gazeta. According to him, in such manner the ministry tries to identify those sectors where Russian industry falls behind the world producers.

"We want to push on the industry to design up-to-date weapon systems. The solution is either to use own-grown developments or to set up cooperation with foreign companies. This implies purchase of license and arrangement of joint production of arms and components in our territory", Serdiukov said.

Periodically appearing need to buy foreign military-oriented products can be also explained by "financial restrictions". "Defense ministry cannot buy products not going with world prices and world quality requirements", explained Serdiukov having noted, however, that the ministry's primary objective was to bring defense output rate up to the level of 80's.

Nevertheless, Russian defense ministry is not about to import arms in large quantities; by such procurements, the military plans to set requirements to Russian-designed weapons. As an example, Serdiukov mentioned Italian armored vehicles Iveco; it is supposed to launch co-production of them in Voronezh, Russia. "We bought them to hold mine explosion resistance test and to check declared characteristics. After trials we made sure everything goes with our demands", said Serdiukov.

Meanwhile, defense ministry managed to agree with domestic manufacturers as of costs for defense products. In particular, contracts will be tied under 'fixed price' conditions; all parameters of such agreements will be determined in advance, even if the question is long-term projects. "Only inflation factor won't be fixed. If it was planned to have, say, 6 percent inflation but really it turned out to be 5 or 7 percent, all things will be recalculated", said the minister.

Production profitability of any type of weapon system will be also stipulated in a contract. According to new regulations, if a company purchases constituent parts from another company, defense ministry's extra charge for such products must not exceed a percent. If the question is home-made products, profitability may reach 20-25%.

"Moreover, in some cases we are ready to pay 30-35% profits, but on one condition. The difference must be spent for technical upgrading of a company, purchase of new technologies and licenses", pointed out Serdiukov adding that companies will be fined for non-fulfillment of contractual deadlines. Manufacturer will have to pay a one-time penalty which is 5% of the order price, and 0.1% for each day of delay.