MOSCOW. Feb 10 (Interfax-AVN) - The risk of an increase in prices for defense products made for the government are among the biggest challenges today, Russian Deputy Prime Minister Dmitry Rogozin said.
"Among the most difficult and most important challenges to date are the risks of an increase in prices for defense products made under governmental contracts," Rogozin said at a meeting which focused on price-formation in the defense industry.
These risks stem not so much from product manufacturers as from suppliers of the second, third and other tiers, who might raise their prices under pressure from a variety of factors, he said.
"Leading defense manufacturers will have to buy their products at higher prices and increase the price of their own products when signing a new contract," Rogozin said.
The negative effect of the rising prices will lead to a sharp fall in profits from contractual assignments and in some cases even to losses for leading defense manufacturers, he said.
"In principle this jeopardizes our plans for a full makeover of the armed forces," Rogozin said.
This should not be allowed to happen, he added.
"We need an adequate response that precludes these negative effects," the deputy prime minister said.