2014-02-04 03:25:01 - Future of the Russian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 - a new market research report on companiesandmarkets.com
The Russia defence market is the world´s second largest arms exporter and contributed 23.8% of the total volume of arms transfers during 2007-2011. In total, it exported to 54 countries in 2011, with combat aircraft accounting for 53% of the country´s arms exports. Covering a large geographical area and rich in natural resources, it places utmost importance on the protection of its borders and critical infrastructure. The country was also the world´s third largest defense spender, as a result of its large domestic defense industry.
Russia is the world´s second largest arms exporter with over 1,300 defense firms that also cater to the entire needs of the Russian armed forces. Funded by booming oil and gas profits, the country is in
the midst of a huge equipment upgrade.
In 2008, the Russian government passed the Strategic Sectors Law (SSL), requiring any foreign firms wishing to purchase a controlling interest in a domestic defense firm to be pre-approved by the government. If approved, the foreign firm can only operate as a minority shareholder in the venture and cannot make decisions that would affect the manufacture or sale of the defense systems produced.
In April 2012, Russian President-elect Vladimir Putin announced that foreign investors will be eligible to bid for stakes in enterprises of Russia´s defense industry, but the process will be controlled by the government. Stressing on the high degree of control at the state level, Mr. Putin also said that only a few defense companies were of interest to foreign investors.
From the Soviet era onwards, Russia has traditionally developed its own defense technology in competition with Western nations. Following the disbanding of the Soviet Union, Russia´s investment in the modernization of its defense systems reduced drastically, as funds were diverted towards the reconstruction of the country. Since this disbanding, Russia has been reluctant to allow foreign companies into its defense industry, an attitude that has proved to be a strong entry barrier for foreign OEMs.
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