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. Last Updated: 07/27/2016

Industry Bills Open Up Aviation

The 39 Strategic Industries

1. Exploration of hydrometeorological processes
2.Exploration of geophysical processes
3. The use of pathogenic agents
4.Deployment, construction, operation and decommissioning of nuclear facilities
5-6. Treatment of nuclear materials and radioactive waste
7.Use of radioactive materials in research and development
8-9.Design and construction of nuclear facilities and production of nuclear facilities equipment
10.Security solutions for nuclear installations
11.Launch and control of space vehicles
12-14.Development, production, distribution and maintenance of encryption devices
15-16. Encryption services and anti-surveillance activities
17.Development, production, sale and purchase of surveillance and eavesdropping equipment
18-22.Development, production, repair, disposal and trade of weapons and military equipment
23-25. Production and trade of weapons, parts and ammunition for small arms
26-27.Development, production and disposal of ammunition
28.Production and sale of commercial explosives
29.Aviation security
30.Development and production of space equipment, technology and infrastructure
31.Deployment of spacecraft and space technology
32.Construction, maintenance and repair of space infrastructure
33.Preparations for space launches
34-37.Development, production, repairs and testing of aircraft
38. Services qualifying as natural monopolies, including oil and gas transportation by pipelines; railroad transportation; services at transport terminals, seaports and airports; electricity transmission, thermal energy transmission
39.Dominant companies in the production and sale of metals and alloys for military equipment
Source: Government memorandum

One of the main goals of the bills setting the conditions on investment in strategic industries is to promote broader cooperation with foreign aviation companies, the government said in a memorandum accompanying the prposed legislation obtained by The Moscow Times.

In an attempt to set clear rules for foreign investors, the government last week submitted two bills to the State Duma, which is expected to review the legislation in the fall session.

One of the bills defines the 39 strategic industries and establishes the criteria for foreigners seeking to buy controlling stakes.

The second bill details amendments for a slew of existing bills, including dropping the 25 percent limit that a foreign investor can acquire in an aircraft maker.

The amendment on the aviation sector would open the way for Italy's Finmeccanica to buy a blocking stake in Sukhoi Civil Aircraft to develop the regional midrange Sukhoi Superjet 100 jointly, the memo said.

Last month, Finmeccanica subsidiary Alenia Aeronautica signed a deal at the Paris Air Show to take a stake of 25 percent plus one share in Sukhoi Civil Aircraft for $250 million.

Sukhoi expects President Vladimir Putin to issue a special decree for the deal to go ahead if the bill does not become law by the end of this year, when the companies are hoping to finalize the deal, Sukhoi spokeswoman Olga Kayukova said.

The amendment could also lead to increased involvement by France's Snecma in the development of the SaM146 aircraft engine together with Russia's NPO-Saturn, the memo said. Snecma said on its web site that the joint venture with NPO-Saturn already operates on a 50-50 basis, however.

NPO-Saturn and Finmeccanica spokespeople declined immediate comment Tuesday.

By dropping limits on foreign participation in the aircraft industry, the government also hopes to advance projects to develop military aircraft with India, the memo said. One projects envisions the creation of a multi-role transport aircraft.

India wants the joint venture to be split on parity basis, said Konstantin Makiyenko, an analyst at the Center for Analysis of Strategies and Technologies.

"The delay was in part due to existing limits on the involvement of foreign capital," he said.