A number of foreign supply industry companies have lost their right to import customs-free components in Russia

A number of foreign supply industry companies have lost their right to import customs-free components in Russia

Zr.ru – A series of automotive supply industry companies making production in Russia have lost the inducements brought by the Enactment no: 566, due to failure to fulfil the obligations of the agreements, signed with the ministry of economic development.

The ministry has stated that some manufacturers fell short of the required localisation rates, as found out during annual audits. Accordingly, the rights of seven companies to import customs-free components have not been extended this year.

The ministry officials abstained from giving out any company names. However, according to Izvestiya newspaper, who reported the news, Modine Rus, manufacturing radiators for KAMAZ in Naberezhnye Chelny, is one of these companies.

Approximately 100 foreign supply industry companies have signed industrial assembly agreements with the government within the scope of the aforementioned enactment, during the 2010-2011 period in Russia. The companies gain the right to import customs-free parts and components, in return for meeting a certain localisation rate.

The AEB Association of European Businesses (AEB) representative, interviewed by the newspaper, states that the foreign supply industry companies making production in the country within the frame of the industrial assembly regime are almost held in pledge, due to the market shrinkage. The representative has drawn attention to the fact that exit from the market is inevitable for manufacturers, which lack the necessary amount of resistance against fluctuations.

The experts state that the situation will push the prices of parts and components up, which will eventually reflect on automobile prices.