UPDATE: Russian manufacturers want import duties for smart cards

(Adds analyst comments in last 3 paragraphs)

MOSCOW, Feb 21 (PRIME) -- Russian manufacturers of electronics and semiconductors have asked for introduction of 50 to 100% protective duties on imports of SIM cards, bank and transport cards, but banks and mobile operators oppose the idea, business daily Kommersant reported on Tuesday citing a letter to the Industry and Trade Ministry and sources.

The manufactures “have production capacities able to meet demand” of banks and mobile operators, while the current zero duty on imports of ready-made smart cards coupled with a duty of 7% on average on imports of components create a “losing” situation for the manufactures, according to the letter by autonomous non-profit organization Telecommunications Technologies, which includes telecom operator Rostelecom and industrial corporation Rostec.

A payment card market source told the daily that Russia’s vendors are seeking the protective duties because they are worried about “the expansion of Chinese makers of smart cards to Russia.”

The manufactures used to buy chips for smart cards from European suppliers, but they had to switch to Chinese analogues in 2022, the source said, adding that now Chinese producers want to enter the Russian market of ready-made cards. The price difference between a Chinese card and a Russian card with an imported chip may reach 500%, he added.

A VTB Bank representative said that the Russian market has faced a deficit in cards and a rise in their production costs over the last years. “The market participants are keen to see a decrease in the price of plastic, including thanks to production of cards abroad,” the representative told the daily.

“For Russian business, it will mean higher costs of smart card purchases, which will be later moved on to the Russian consumers,” MForum analyst Alexei Boiko told PRIME.

He said that if the idea is approved, “we will see a decline in imports of smart cards to Russia.”

The difference in quality features of national and foreign smart cards is huge. “Russian manufacturers would like to add a handicap to all the rivals from China to become at least slightly more competitive and get more orders from the Russian companies,” Boiko said.

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