1 Aug 2022 12:28

Russia to raise cap on transport subsidies for non-resource exports from 11% to 25% of product cost

MOSCOW. Aug 1 (Interfax) - The Russian government has approved new rules for providing subsidies to offset the cost of shipping non-resource, non-energy exports, raising the limit on the amount of compensation to 25% of the product's cost from the current 11%, Prime Minister Mikhail Mishustin said at a meeting with deputy prime ministers on Monday.

"The Russian economy is still open for all countries that want to develop partnership relations with us. But amid sanction restrictions Russian producers and suppliers, of course, face additional costs and problems. In order to support such companies the government is simplifying the current procedure for receiving compensation for up to 80% of expenses on transporting their products, and also more than doubling the maximum amount of such payments from 11% to 25% of the cost of exported manufactured goods," Mishustin said.

"Now in order to receive subsidies companies do not need to submit an application ahead of time stating the planned amount of shipments and go through a complicated selection process," he said, adding that it "will be possible to present all the necessary documents upon actual shipment of products to foreign markets." The new subsidies procedure will be in effect in 2022-2023.

"Almost 8 billion rubles has been provided for this purpose under the International Cooperation and Exports national project," Mishustin said.

The subsidies for shipping products destined for export markets are distributed through the Russian Export Center (REC) under the International Cooperation and Exports national project. The subsidies now provide compensation for up to 80% of companies' actual shipping costs within a set limit of no more than 500 million rubles per year and no more than 11% of the cost of the shipped product. This applies to products shipped by truck, train, ship and air, with the latter applying only to the pharmaceutical industry.

Under the current parameters for distributing the subsidies, 50% go to the machine building sector, 30% to the chemical and forestry industries and the remaining 20% go to other sectors. The metals industry was previously one of the recipients of the subsidies, but last year the authorities excluded it from the list. However, in June the Industry and Trade Ministry proposed resuming compensation for shipping metal products for export, given the drop in metallurgical companies' export earnings.