Flying high-tech

Before the recent change in government, Russian officials set in train a series of radical programmes aimed at modernising the high-tech sector of the economy. Rather than distance itself from the previous policy, the new administration decided to extend its modernistic agenda. Central, it seems, is a belief that high-tech, IT, and knowledge-based industries will eventually form a major part of Russia's economic output.

It was German Gref - the former Minister for Economic Development - who introduced the term "high-tech" into Russian governmental parlance. Before he left office, Gref announced a series of reforms aimed at emulating the high-tech performance of China and India, and predicted that Russia would eventually increase its global share in this sector to 10pc (from today's 0.13pc).

Today, Gref is gone, but his radical plan remains top of the government agenda.

Speaking at the Hanover Industrial Fair, Communications Minister Leonid Reiman said the government recognised its responsibility to the high-tech sector, and considered intervention and active support essential. He used the occasion to outline a series of tax-exemption initiatives, including tax-free business zones, which will soon be made available to Russia's leading high-tech companies. The incentives would, he said, predominately focus on the areas in which Russia is already competitive and has considerable expertise, such as space, atomic and military technologies.

A special governmental agency would be created to manage the tax programmes, which are supplementary to the existing Development Bank and Development Corporation, and the three billion roubles (£60m) in annual subsidies already promised to non-commodities exporters this year.

Two thousand and seven was, overall, a pivotal year for Russian high-tech industry, not least because it witnessed the sector's first IPOs. These were regarded as highly positive developments, not just because they opened Russian IT firms to worldwide financial resources, but also because they made it necessary for these businesses to adopt international standards of transparency and corporate governance.

The view of industry insiders is also broadly positive. Mikhail Pogosyan, CEO of the well-regarded aircraft holding Sukhoi, believes that Russia will soon regain its leading position in aircraft manufacturing. Indeed, today overseas sales are now the main source of income for Russian aircraft manufacturers. Sukhoi, for example, has had great success in exporting the Sukhoi Su-27 and Su-30MK fighters; experts estimate the market share of the Su-27 alone amounts to more than £5bn.

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