In the Russian Federation, there is a noticeable increase in technological degradation in the manufacturing industry against the backdrop of unsuccessful attempts at import substitution. The number of enterprises reporting a decline in product quality due to the inability to find domestic analogues for imported components and equipment is rising.
This is reported by Finway
Dependence on Imports and Formal Import Substitution
According to analytical reports, as of February 2026, most manufacturing enterprises in Russia have not managed to establish production of necessary parts and materials on their own. As a result, industrialists are forced to lower product quality and the efficiency of production processes, which is the only available way to adapt to sanctions restrictions.
“As of February 2026, most enterprises in the manufacturing industry of Russia have been unable to find a full-fledged domestic replacement for foreign spare parts and equipment. Businesses have partially adapted to the sanctions regime in the only available way – by reducing product quality and production efficiency”
Throughout 2026, the number of companies reporting negative changes in product characteristics due to continued dependence on imported components has increased. At the same time, many enterprises are forced to restructure their technological chains due to the lack of quality Russian raw materials.
In some sectors, particularly in machine engineering, the localization rate has reached 70%, but the dependence on imported numerical control systems and sensors remains critically high – up to 80-95%.
Industry Problems and Economic Consequences
The industry is facing systemic problems: the difficulty of finding alternative spare parts, rising production costs, increasing end prices, and limited opportunities for cooperation even with suppliers from so-called “friendly” countries.
Since 2024, negative factors have continued to outweigh adaptation processes. According to S&P Global, the manufacturing activity index in Russia in February 2026 was 49.5 points, which is below the threshold of 50 points and indicates a prolonged contraction in production activity.
A model of “partial import substitution” is forming in the industry, where only the assembly of final products is localized, while key technological components continue to be imported. At the same time, certain indicators of production activity are maintained solely due to defense orders, while civilian sectors remain in a state of stagnation.