Russian officials are considering the implementation of a new industrial tax designed to protect local manufacturers from international competition while addressing the growing deficits in the federal budget, according to Industry and Trade Minister Anton Alikhanov.
This initiative arises during a significant downturn in manufacturing activity, comparable to the early days of the comprehensive invasion of Ukraine, and in response to increasing financial pressures on the government.
During a speech to the Federation Council, Alikhanov pointed to a recycling fee that currently applies to the automotive industry as a successful example of such a policy.
Initially intended to cover environmental costs associated with the disposal of vehicles, this fee is charged to both domestic and foreign producers, although Russian manufacturers receive state compensation.
“The recycling fee has proven to be an effective protective measure for the local automotive market,” Alikhanov remarked.
Nonetheless, Maxim Sokolov, the president of AvtoVAZ, Russia’s leading car manufacturer, indicated that the recycling fee offers limited assistance and urged for more substantial state support.
“Alongside existing macroeconomic challenges, local manufacturers are contending with significant risks due to dumping practices by importers from various nations,” Alikhanov said, referring to the phenomenon of foreign companies selling products in Russia at prices below their market value, which creates uneven competition for local firms.
Moreover, elevated interest rates have sharply diminished demand for numerous products, especially durable goods. The strong ruble has further complicated matters for Russian manufacturers, as a robust currency undermines exports.
“Regardless of its final form, the proposed industrial levy would enhance budget revenues and support local manufacturing,” Alikhanov stated, characterizing it as a “protective tool” that would facilitate the ongoing advancement of domestic industries.
The Russian government’s budget is experiencing considerable pressure, with the anticipated deficit exceeding 3.8 trillion rubles (approximately $48 billion), or 1.7% of GDP.
Analysts at Gazprombank suggested that the actual deficit figure might rise to 4.3 trillion rubles (around $55 billion).
First Deputy Minister of Industry and Trade Vasily Osmakov highlighted the radio-electronics sector as a likely candidate for the proposed tax. However, a definitive decision on which sectors will be affected has yet to be made.
According to Dmitry Alekseev, founder of the DNS retail chain, sales of household appliances and electronics experienced a nominal decline for the first time in the first quarter. Many consumers rely on credit to buy such items, yet consumer lending has fallen for eight consecutive months.
The state statistics agency Rosstat reported that television production plummeted by 25% in the first five months of 2025 compared to the same period in 2024, while the production of washing machines decreased by 3% and refrigerators by 9%.
There have also been calls from various sectors, including footwear manufacturing and producers of LED lights and fiber-optic cables, for the introduction of an industrial levy or similar support initiatives. However, so far, the ministry has refrained from implementing more extensive measures.
