Russian telecom consortium warns of impractical import substitution targets

Russia’s Telecommunication Technologies Consortium (TT Consortium), which includes Rostech, Rostelecom, and Element, has raised serious concerns about the country’s new import substitution requirements for telecom equipment. The consortium has formally communicated to the Ministry of Industry and Trade and the Ministry of Digital Transformation that the proposed targets for domestic components are unachievable.

According to the TT Consortium, the domestic market in Russia needs more suitable alternatives to many foreign components, making the mandated thresholds for domestic content impractical. Furthermore, the consortium has warned of potential severe repercussions if the stringent regulations are adopted in their current form. They fear the resolution could lead to the suspension of decisions recognising telecom equipment as domestic starting 1 December 2024. Consequently, this could result in no domestic telecom equipment being available, disrupting supply chains and impacting key sectors, including government operations and critical information infrastructure.

Additionally, the Telecommunication Technologies Consortium has criticised the draft government decree’s ambitious targets, which require telecom equipment to include 10% domestic components by 2026, 30% by 2028, and 60% by 2030. Manufacturers within the consortium argue that redesigning equipment to meet these requirements is daunting, given the current state of domestic component availability. They assert that such redesigns could lead to significant operational disruptions and hinder their ability to supply essential equipment to government clients and critical infrastructure entities.