New Russian State and State-Owned Procurement Policy To Focus On Domestic Technology
Russian Finance Minister Aleksei Kudrin announced yesterday that the government is instituting new procurement policy to buy technology products that are innovative and made in Russia.
Russia’s state procurement budget is around $133 billion. About $20 billion of this now goes to Russian technology companies.
In addition to government purchasing, the government plans to direct state-owned companies to buy local tech as well. Next Thursday, a presidential committee on modernization will be meeting with Russian industrialists in the city of Tomsk to push the new policy.
The good news here is that the government seems to be pro domestic innovation and has recognized the need to catch up to the world in technology. Whether or not this classically Russian top-down approach to the problem will be effective remains to be seen. Nascent companies are best supported by strategic private equity and venture capital investors with experience and expertise in commercializing new technologies.
In general, new technologies are adopted because they are superior to the competition and fulfill a market need. While Russia’s technology industry desperately needs to develop and modernize, Russian industry has the same needs – needs that may not be served by forcing them to buy inferior local products.
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Great picture… I’m not sure how private equity funds in russia should react to this. I assume the majority of state procurement in the technology sector is for military items – weaponry, etc. McKinsey would do well do beef up their innovation practice in Moscow, I guess.