In June 2015, the government of the Russian Federation announced a changed incentive to localise business operations.



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Inception date: 04 Jun 2015 | Removal date: open ended

Localisation incentive

On 4 June 2015 the Russian Government approved Decree Nr. 550. It amends Decree No. 1432 of 27 December 2012, the original decree which as of 1 January 2013 introduced rules concerning provision of subsidies for agricultural machinery.

Decree Nr. 550 has introduces the following main amendments to Decree No. 1432:

  1. Producers of agricultural machinery can obtain a state subsidy of up to 25% of the price of the agricultural machinery. When the sale of agricultural machinery involves agricultural producers registered in the Crimean, Siberian and Far Eastern Federal Districts, the subsidy will be 30% of the price of agricultural machinery. In the original Decree No.1432 the subsidised percentage of the price of the agricultural machinery was 15%.
  2. Compared to Decree No.1432, Decree Nr. 550 increases the upper bound of the subsidised machinery including tractors, harvesters, tractor seeders, potato diggers, potato sprayers and aerosol devices.
  3. Article 6 of Decree 550 contains a list of technological operations which must be performed in Russia in order the applicant for a state subsidy to be authorised to receive it. This article can be interpreted as a localisation requirement.

According to the text of Decree No. 550, this state initiative "will help increase the purchase accessibility of agricultural machinery and increase the volume of supply of such equipment to agricultural producers'.

The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.