russian Businesses Have Acknowledged the Failure of Import Substitution

5/24/2026

83% of russian businesses have acknowledged that the “national regime” in public procurement is not working – 61% consider the mechanism ineffective, and another 22% have seen no effect from it.

The “national regime” was launched on January 1, 2025, with the aim of replacing imports in government procurement with goods from russia and EAEU countries. The result is a bureaucratic maze with no tangible results.

The central problem: “false localization”, where products are declared as russian but assembled from foreign components. The same imports, but with a different label and a much higher price.

Moreover, the pricing methodology in government contracts is not defined. The rf’s industrial products registry is so difficult to navigate that some suppliers simply refuse to participate. Information on available russian equivalents is scattered, while their quality is questionable.

At the “goszakaz” forum, officials from the ministry of industry and trade and the federal treasury acknowledged that the system needs refinement. In parallel, a mechanism for official exceptions is being developed – permits to purchase imports where russian suppliers cannot meet the demand. In other words: the state itself is establishing an official mechanism to circumvent its own import ban.

The paradox of the “national regime” is that it increases the administrative burden, weakens competition, and offers no quality guarantees, yet it still relies on foreign technologies and components. Tightening restrictions may increase the share of goods listed as “of russian origin” in the registries, but technological dependence will not disappear. It will simply be better hidden behind bureaucratic procedures and paper localization.