Boeing to Russia: Tax break is needed

Boeing on Monday urged Russia to provide tax breaks for the world's biggest titanium producer as part of the aerospace company's plans to spend as much as $18 billion in the former Soviet state.

Speaking at a seminar in Moscow, Boeing Russia President Sergei Kravchenko called on the government to create a low-tax special economic zone centering on Verkhnaya Salda, headquarters of OAO VSMPO-Avisma, the world's biggest titanium producer and partner with Boeing in a joint venture.

Russian-produced titanium makes up as much as 50 percent of some of Boeing's planes.

"The granting of special economic status would increase the efficacy of our joint venture and would act as a catalyst for this major Russian-U.S. project," Kravchenko said.

Both Boeing and rival Airbus have been increasing their presence in Russia as they seek to tap into that nation's engineering talent and lower labor costs.

Russia has created six zones since 2005 to help develop its technology sectors, diversify the economy and reduce its dependence on oil and gas.

Russian President Vladimir Putin has said more zones should be set up in Siberia and Russia's east.

An application for Verkhnaya Salda is under consideration, said Yuri Zhdanov, head of Russia's Federal Agency for Administration of Special Economic Zones. He added that in addition to aviation, the zone would also become a hub for medical and nuclear research.

The Russian government has been tightening its grip on its natural resources, such as oil and natural gas, and biggest industries, including aviation.

It's seeking to gain control of VSMPO-Avisma, which produces 30 percent of the world's titanium, through its weapons agency Rosoboronexport.