The Russian government plans to solve the problem of a shortage of machinery in the domestic industry of nonwovens, which was caused by its own sanctions, imposed on Russia by Western countries. These sanctions introduced a ban on the imports of many types of the industry’s equipment, according to an official representative of the Russian Ministry of Industry and Trade.

This will take place through the provision of subsidies for the establishment of new facilities for the manufacture of the industry’s equipment and machinery. There is a possibility that such subsidies will be allocated to Russia’s leading machine-building enterprises, which specialize on the production of machinery for the domestic textile and nonwovens industries.

According to earlier statements of analysts of the Russian Ministry of Industry and Trade, the imposition of Western sanctions and countersanctions of Russia may fully suspend the process of modernization of the majority of leading local nonwovens producers and may pose a threat of collapse of the entire Russian nonwovens industry.

Still, according to an official spokeperson for Russian prime minister Dmitry Medvedev, such a threat would be averted by the design of a package of measures, aimed at providing of additional support to the national industry of nonwovens and technical textiles by the Russian government.

As part of these measures, the Russian government plans to provide up to RUB 6 billion ($170 million) in subsidies for the establishment of production of technical textile and nonwovens machinery in different parts of the country by 2016.
It is planned that the funds will be distributed among the leading Russian machinery producers by Stankoprom holding, one of Russia’s largest producers of machinery, (which is comprised of eight plants, specializing on the production of machinery for technical textiles and nonwovens).

According to an official representative of the Russian Ministry of Industry and Trade, the subsidies will be provided as part of the existing state program, “The development of machine tool building industry in Russia,” which was recently designed by the Russian governmnent.

It is planned that of the RUB 6 billlion, about RUB 2.2 billion will be allocated already by the end of the current year, another RUB 1.8 billion will be provided in 2015, while the remaining RUB 1.5 billion in 2016.

In the meantime, the current situation in the Russian industry of machinery for technical textile and nonwovens industry remains complex, despite the attempts of the state to improve it, which have been taken in recent months.

According to data of the Russian Ministry of Industry and Trade, at present, the total level of depreciation of equipment in the Russian nonwovens and technical textile industry is estimated at about 80%, while the dependence on imports is more than 85%. The demand for imported machinery from domestic nonwovens producers remains high, while the domestic machinery production is currently unable to meet the local needs even by 50%.

Gleb Nikitin, Russia’s first deputy Minister of Industry and Trade, said that the government plans to establish both independent enterprises, as well as production facilities that will be affilated with Stankoprom, and which will operate in the form of joint ventures with the latter.

According to Nikitin, it is planned that Stankoprom will carry out a control for the  implementation of the projects.

According to Sergey Makarov, chairman of Stankoprom, all the projects will be approved by a special state interdepartmental commission.

He has also added that the established facilities should have a wide production range, which should include machinery, which is no longer imported to Russia, due to the existing bans.

It is planned that the companies that should receive state funds will include leading Russian machine-building enterprises such as the Savelovsky Machine Building Plant, the Russian Research & Development Tooling Institute (both of which are part of Stankoprom), the Sterlitamak Machine-Tool Plant, which is part of Russian Stan Industrial Group, the Donpressmash plant, Sasta enterprise and some others.

According to Sergey Makarov, during the first stage of the project Stankoprom will get small stakes in the joint ventures and will provide funds in the form of loans with the possibility of their conversion into shares.

Makarov has also added that conversion should provide a significant share in the joint venture. At the same time, in the case of Stankoprom, the company plans to control projects during the entire period of their implementation, with the aim to evaluate their efficiency.

In the meantime, Russian analysts in the field of nonwovens and machine-building believe that the allocated funds will be insufficient for the full-scale replacement of banned Western equipment by the domestic production.

Georgy Samodurov, president of the Stankoinstrument, Russian public association, which unites the country’s leading producers of machine tools, believes that the allocated RUB 6 billion will not be enough to implement the program of import replacement in the national industry of nonwovens and technical textile machinery.  However, he says that, in addition to state funds, the government also hopes to attract private capital to the industry.

At the same time, according to estimates of the Russian Ministry of Trade, implementation of state plans will require about 30 billion rubles ($700 million) by 2018.

According to the ministry, the establishment of such production facilites is an acute need in Russia and the country’s nonwovens producers. Even if Western sanctions and the existing bans on the imports of equipment are listed, Western suppliers may be too expensive for a significant part of Russian nonwovens producers, even large-scale, as, due to thedevaluation of national currency, caused by sanctions and the declining oil prices, which will result in a significant increase of prices for such equipment. n