Vladimir Putin's opening remarks:

Good afternoon, colleagues. Before we get down to the main matter at hand, allow me to say a couple of words about the company in which we are now located.

Uralvagonzavod is one of the largest companies not only in the Urals, but the entire country. It employs 67,000 people, which makes it a very large company. And it, just like many companies in the real economy, is going through hard times during the crisis.

In late 2008 production fell considerably, and, more importantly, uncertainty due to a lack of orders increased. However, we in the Government and the new company director are working together to weather this crisis after all and come out of it with minimal losses. In general, I think that we have already been able to bring the company up to the level of 2007, which overall was a successful year.

More importantly, there have been a series of civilian orders for 2010 to 2011. I am very much counting on the new director and the new governor to do everything in their power in order for these plans to be realised.

The orders have been placed to meet the requirements of Transneft, which must be able to transport oil from Skovorodino to the shores of the Pacific Ocean. Russian Railways, private carriers and foreign companies have also placed orders.

The company's defence work continues. It is fulfilling government defence orders and defence contracts for export. New products are also being developed.

Nevertheless, the crisis has caused a number of problems for the company, which are primarily associated with the economy, finances, debt liabilities and fulfilling these obligations at the same time. Production needs to be improved and social issues need to be resolved.

Incidentally, the latter issue is being addressed rather well. I hope this will continue. For its part, the Russian Government will support the region, the city and, clearly, the company. We will help them.

Quite recently we decided to contribute 4.4 billion roubles to the company's registered capital so that it could reach settlements with suppliers and solve other problems. The money has been received.

Early next year, Uralvagonzavod will receive 10 billion roubles in the first quarter, also for its registered capital. This is direct aid to the company for its financial recovery and servicing its debt, which is being acquired so that the company can be modernised, even in these difficult conditions.

In 2009, most of the main necessary procedures to establish the Uralvagonzavod holding company will be completed. The holding company will include 19 companies spread across Russia.

I wanted to come back to what I started with. We need to continue to diversify the economy of the region, and specifically of Nizhny Tagil. We need to do everything to resolve social problems in the right way. I'll say it again - so far we have mostly been able to do this. I am counting very much on us not decreasing our efforts in this area, but conversely, on us increasing them.

Now let's discuss the main matter at hand. Let's talk about the subject we came here to discuss in the first place. We have come here in order to discuss the problems associated with the defence industry.

We are holding our regular meeting today to discuss the defence industry and re-equipping the Russian Armed Forces with modern military hardware.

Today we'll discuss the prospects for creating modern prototypes of our armour and automotive equipment.

We were always proud and are still proud of the traditions and capabilities of Russian tank building, of the strong scientific and production capabilities of this sector and its highly qualified personnel.

Unfortunately, in the 1990s and the early 2000s, Russia could not afford to buy new fighting vehicles for its own Armed Forces. It had to make do with repairs and partial upgrades of the existing vehicles, which, for objective reasons, were getting older and older.

At the same time, our new equipment was able to carve out a rather reliable niche in the global market. Export orders, of course, became an important line of support for Russian companies. Accordingly, I would like to extend to the company's management, workers and engineers the warmest greetings and gratitude from our Indian partners - yesterday, as you know, we met in Moscow with the Prime Minister of India, Mr Singh.

But still the main goal of the defence industry is to supply our own military. Today we need to look to the future and keep in mind that science and technology for defence needs are developing at a rapid pace all over the world. And in the modern world, tanks and other armour, as before, remain one of the main components of any military. The manoeuvrability of forces is achieved primarily by reliable military vehicles.

The Russian Armed Forces need a new generation of armour and automotive equipment that will fully meet the requirements of modern armed forces. It must be created on standardised platforms.

The development of such modern and robust hardware directly depends on the unity and clarity of scientific and technical policies. Therefore, as soon as possible we need to consolidate the results of scientific research and design work, identify the most promising solutions and come up with a unified plan for future design work. I mean engines, weapons, ammunition, observation and aiming devices, as well as automated control systems.

Until the production of entirely new types of weaponry is in full swing, the Armed Forces' needs will be filled by buying existing hardware. But I want to emphasise that we should buy such hardware only if it is absolutely up-to-date. In 2010, for example, we plan to begin production of the improved BMP-3 infantry fighting vehicle.

Next. As the military transitions to its new, modern structure, it needs to be divested of its so-called non-core assets, or in the case of the Armed Forces, its non-core activities. Accordingly, it is necessary to develop a system for maintaining armour and automotive equipment at the manufacturer's plants. Maintaining separate auto services and tank repair plants is an unjustified and inexcusable extravagance in today's conditions. What is more, experts from the plants where the hardware is produced are better qualified to do this work. And they will receive additional funding.

We must once again analyse the situation regarding investments for modernising defence industry equipment. The main reason we are meeting here today is to analyse the state of the defence industry and the prospects for creating new prototypes of weaponry that have promise for the future.

Considerable budgetary funds have been allocated for these purposes in recent years. We need to ensure that these funds are concentrated in companies that are truly promising, which will allow us to achieve an effective return on every rouble of government money invested.

Let's discuss this and get down to work.