Russian Government To Be Bulk Buyer Of Technical Textiles

Trade & Policy

Russian Government To Be Bulk Buyer Of Technical Textiles

The Russian government plans to place massive orders for the production of technical textiles and nonwovens for use in special clothing, as well as defence sector, during the next several years, according to recent statements of an official spokesman of Viktor Yevtukhov, Russia's Deputy Minister of Industry and Trade. Currently, special clothing remains probably the most promising segment of the Russian clothing industry, in terms of further growth. In addition, there is an ever growing demand for innovative solutions, based on nonwovens and technical textiles.

At present, the production of special clothing in Russia is on the rise, and according to official statistics of the Russian Ministry of Industry and Trade, last year the production volume grew by 33%, compared to 2015. This is mainly due to the ongoing process of import substitution in the industry, combined with big state support.

According to government forecasts, demand for innovative technical textile and nonwoven solutions will continue to grow during the next several years, thanks to the ongoing recovery of the major consuming industries and a large state defence order. In the latter case, the Russian government plans to continue active purchases of technical textiles for the needs of the Russian armed forces for the next several years.

Planned purchases should speed up the design of a new generation of military uniform for Russian troops, which was announced by the government several months ago. It is planned that the design of the new uniform will be carried by Russia's leading special clothing producers, in cooperation with local research institutions. Currently, the segment of special clothing has big potential for further growth. According to the latest statistics of the Russian Ministry of Industry and Trade, the average annual per capita expenses on employees in Russia is estimated at only US$ 100, compared to US$ 350-400 in the case of the EU states. A significant part of this is allocated for the provision of workers with special clothing, produced on the basis of innovative materials.

According to Yevtukhov, the demand for new uniforms, based on innovative technical textile applications will be also driven by the ever-strengthening labour protection standards & tightening state regulations. It is expected that the Russian army will not be the only consumer of the new types of uniforms, as the same materials will also be used for the design of clothing for the national special services, which are in acute need, as the number of special services officers has almost doubled in the last several years.

Finally, the demand for modern clothing and uniforms should grow significantly from leading Russian state and industrial corporations, such as Rosneft, Gazprom and others, providing additional orders for producers. Overall, according to Yevtukhov, the Russian market of special clothing could reach 200 billion rubles (US$ 3.5 billion) during the next several years, however, that will mainly depend on the ability of domestic technical textiles and nonwovens producers to ensure stable supplies and the overall business environment in Russia.

The Russian government says it is ready to offer the domestic nonwovens and technical textiles producers stable long-term orders for the manufacture of their products. It is also considering providing additional subsidies to enable producers to pursue further development and production expansion. Currently, the majority of Russian technical textiles and nonwovens producers still experience a shortage of funds. However, due to the existing sanctions' regime, cheap Western loans still remain unavailable. Producers were specifically relying on loans provided by the European Bank of Reconstruction and Development (EBRD), which used to be one of the biggest lenders in the Russian technical textiles sector, but the organisation recently announced it decided not to resume its investment activities in Russia.

At the same time, the idea of the Russian government to replace the EU and the US funding by Chinese loans also failed, as the conditions of lending, offered by Chinese bank and financial corporations, were considered by majority of Russian producers as unacceptable and enslaving. Many Russian producers also fear the repetition of the situation that happened in the neighbouring Kazakhstan, when the influx of Chinese capital several years ago had resulted in the shift of the majority of Kazakh textiles and technical textiles enterprises under the control of Chinese businesses, including those that had strategical importance for the Kazakh economy. Due to this, state orders are currently considered as main survival means for Russian technical textiles producers, as well as global enterprises, operating in the country. In the latter case, the government has already announced its plans to create conditions for the attraction of major technical textiles and nonwovens producers to establish and expand their already existing facilities in Russia.

As part of this, the government plans to make additional proposals to foreign investors doing business in Russia. This will take place during the forthcoming St. Petersburg Economical Forum, from June 1 to June 3.