The conditions for export subsidies in Russia have changed

The conditions for export subsidies in Russia have changed

Vedomosti – The industrial assembly agreement now gives the right to claim up to 20% of the transportation costs as compensation from the budget during the exports of automotive products, as opposed to up to 80% as it was the case in 2016, according to a government decree. 

Most of car manufacturers, running factories in Russia, have industrial assembly agreements. However, the validity of the agreements will run out in 2020 and the government has no intention to extend their terms. 80% compensation can now be claimed, on the other hand, by manufacturers who signed a special investment contract with the Russian authorities, as reported by Vedomosti.

“The measures are designed to encourage the manufacturers to localise their production in Russia” – said Maria Zazulinskaya, the director of Russian Export Centre (REC, the agent of the programme) for Sectoral Export Development. 

According to REC data, export subsidies have been used by KAMAZ, AVTOVAZ, GAZ Group enterprises, UAZ, Volkswagen Group Rus, GM-AVTOVAZ, Hyundai Motor Manufacturing Rus, PSMA Rus, NAMI, Renault Russia, Nissan Manufacturing Rus and Volgabus in 2016. 

Car factories have been developing the exports of finished automobiles and components despite a market shrunk by a half since 2012. For that reason, the average revenue load of the plants is around 40%, according to officials. UAZ plans to double its exports in 2017 and AVTOVAZ aims for a 70% increase. PSMA Rus has announced plans to start its first export project beyond the borders of the CIS countries. It’s planned to generate a total amount of $1.1 billion from car exports in Russia in 2017, increasing the figure to $1.5 million in 2018, according to the REC.