In Russia, "import substitution," like many other things, has long turned not into technological development but into a convenient way to siphon off budget funds. The state allocates money for the creation of "domestic developments," after which companies take ready-made
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Western solutions, slightly adapt them, and present them as their own innovations, keeping subsidies and reporting an alleged technological breakthrough. A telling example is the case of the company Newco. The Ministry of Industry and Trade attempted in court to recover
177.6 million rubles, arguing that hearing aids developed with state funding were in fact based on technology from the Danish company Oticon and did not constitute an independent development. However, the Moscow Arbitration Court sided with the business, ruling that
the use of foreign components and platforms is a normal part of import substitution, and that localization and modification qualify as full-fledged development work. The court concluded that the product had been localized and adapted to Russian conditions
and classified this work as legitimate research and development. As a result, the scheme received judicial confirmation: a Western technology can be rebranded as a Russian one and the state money can be kept.
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