Companies with industrial assembly agreements will be eligible for 85% reimbursement on duties on components

Companies with industrial assembly agreements will be eligible for 85% reimbursement on duties on components. According to Kommersant newspaper, the demand support programmes in automotive industry will be preserved in general and a large amount of export subsidies may be provided. The subsidies will be available for car manufacturers regardless of special investment contracts, which have been the subject of heated discussions in recent times. The share of exports in production or revenue will be amongst the possible criteria.

A reimbursement of 85% of the costs due to the increase in duties on components will also be added to the government support on automotive industry. The decision to increase the duties has been taken by the Council of Economic Commission for Europe in September, in accordance with the obligations of the Russian Federation to the WTO: the customs privileges of foreign car manufacturers due to the industrial assembly regime will be abolished and the duties will increase by 3-10% on average.

Partial compensation is due to the fact that only 85% of the duties are received by the budget of the Russian Federation, as explained by sources in the government. According to Kommersant, the workgroup has been given the task to prevent unfair competition and the exit of companies, which invested in localisation in Russia from the country, due to the increase in duties. Hyundai Motor Manufacturing Rus has estimated that the company will lose approximately 5 billion rubles annually, due the expiration of the industrial assembly regime and the absence of a special investment contract.

According to sources in departments, the preservation of a minimum government support for car manufacturers following the expiration of the industrial assembly regime is being discussed currently. The support is planned to be increased subsequently, in parallel with the creation of a new added value in the Russian Federation. However, a number of sources in the market have doubts whether the return to utilisation fees through subsidies would be complete.

The experts are of the opinion that the guarantee of the return of duties would be logical in the transition period and the differentiation of the requirements of the Resolution no:719 makes sense, depending on the segment: the production economy of 200,000 and 20,000 automobiles per year is different.

Source: RusAutoNews.Com