Car plants are the main beneficiaries of the new government support system

Car plants are the main beneficiaries of the new government support system

Vedomosti.- Metallurgists and car manufacturers will receive more than half of the government support to be allocated within the framework of the recently developed universal mechanism of industrial subsidies, according to the draft government decree. The aforementioned industries will have a share of 28.3 and 24.5% of the financial programme respectively, according to the document prepared by the Ministry of Industry and Commerce. 350 billion rubles will be allocated in total under the new support programme, as stated by a federal official. The amount is the lower threshold of the range under discussion, said the manager of a large car company and the upper limit is 420 billion rubles, as written in Vedomosti newspaper.

40% of all subsidies are proposed to be allocated on machinery manufacturing, up to 168 billion rubles. In addition to the automobile industry, the manufacturers of road construction and agricultural vehicles may get up to 25 billion rubles and shipbuilders up to 10 billion rubles government support from the aforementioned amount.

The source of the Kommersant newspaper from the expert community, familiar with the preparation process of the document, notes that the distribution of subsidies by industry is generally in line with the current situation, however, this does not contribute to the fulfillment of the tasks set by the presidential decrees issued in May.

The specific obligations regarding the ratio of export revenues to the total by 2024 are also formalised in the document. These are the indicators that companies must include in their corporate programs of international competitiveness (CPIC) to get access to subsidies. The goal is set at 10% for the automobile industry, while exports formed 6.5% of production in 2017.

As stated by Nissan, the targets are designed to stimulate the export of competitive products, however, it remains to be seen whether the mechanism generates enough funds in the early years. In general, the company has welcomed the new government support system as being “very timely”: “In addition to the existing subsidies on transportation, the new system should have a positive effect on increasing export volumes”.

GAZ Group, on the other hand, draws attention to the fact that according to the document, the recipients of CPIC subsidies are not entitled to other subsidies to increase competitiveness, for example, on transportation.