Ensuring and supporting export growth is currently one of the key focus areas of the Russian economic policy. To that end a variety of export support institutions has been established.
- The Russian Export Centre (exportcenter.ru) provides information and consulting support to exporters in respect of export transactions, assists promotion of manufactured products and agricultural produce abroad, and provides financial support.
- The Russian Export Agency (exiar.ru) provides insurance support for exporting “Made in Russia” goods and services and assists businesses in entering new markets. The Agency insures businesses against risks of non-payment by a foreign counterparty regarding export credits and export shipments made on deferred payment or confirmed letters of credit terms.
- ROSEXIMBANK (eximbank.ru) offers affordable financing to Russian exporters and issues independent guarantees to secure a refund of advance payments and proper fulfilment of obligations under export contracts and payment obligations.
- The State Corporation “VEB.RF” (https://вэб.рф/en) coordinates activities of state-run institutions regarding support offered to exporting products made in Russia.
Federal Customs Service reported that export of goods abroad in 2018 amounted to US$449.6 billion, which is 25.8 % higher than in 2017. According to the Russian Export Centre, the following sectors (with the oil and gas and energy sectors excluded) hold leading positions in the structure of Russian export: metal products: 9.7 %; machinery: 7.4 %; chemical products: 6.1 %; food and commodities: 5.4 %; timber and paper products: 3 %; precious stones and metals: 2.2 % [1].
Note that metallurgy also makes considerable contribution to Russian export: in 2018, its share in total non-resource and non-energy export was about 30 %. In year 2018 the civil mechanical engineering products also showed export growth of 2.8 %, and export in monetary terms surpassed the level of 2014.
A good example of State support becoming key factor and driving mechanical engineering export is the signing of a loan facility agreement between Roseximbank and Cuban BICSA (Banco International de Comercio S.A., Cuba) with total amount exceeding 600,000 euros in regard to the “loan to a foreign purchaser’s bank” product. Under the loan facility agreement Roseximbank will finance spare parts supply for generators of the thermal power plant “Este Havana 2”. The respective agreement was signed between Power Machines OAO and the “Energoimport” Import and Export Association for Electrical-power Facilities. The new agreement further reinforces successful cooperation between Roseximbank and BICSA: in December 2015, more than 20 million euros were allocated to support export of Russian rail cars. Another example is the exporting support provided by the Export Agency to Udmurtia region businesses (Izhevsk Plant of Oil Engineering AO and Polymet-Trading OOO) working in power and electrical engineering industry with total amount exceeding US$2 million.
In the agricultural sector, total grain export in 2018 was up by 27 %, to 54.9 million tonnes, it’s a new historical maximum. For the second year Russia becoming the world’s second country in terms of grain export. It also became the world’s second country with grain export surpassing 50 million tonnes, for the first time in its history.
According to the Russian Export Centre, chemical products export in 2018 grew by 6.7 %, which is the largest figure for the last 6 years.
Along with direct export support through state-run institutions, the Government of the Russian Federation grants subsidies to all businesses that develop export of Russian products. Manufacturers of exported goods are entitled to various subsidies, in particular, subsidies to compensate the costs of research and development, purchasing equipment, investments in infrastructure, etc. Banks that finance export transactions can claim subsidies to compensate them for shortfall in profits regarding export loans granted to secure international competitiveness. Exporters may also be directly entitled, for example, to a subsidy covering their transportation expenses.
The existing measures of state export support are as follows:
1. Program aimed to improve competitiveness and volume of manufacturing and export (KPPK Program) (the Government’s Decree No. 191 dated 23.02.2019). Participating entities have access to low-interest loans in following areas: investment loans to establish export-oriented production in Russia or abroad, post-export financing and international factoring, forfeiting, letters of credit, and loans to foreign purchasers and banks of foreign purchasers. Execution period of the Program is 2 to 5 years; the maximum amount of one loan is up to 60 billion roubles for investment loans and up to 30 billion roubles for other loans.
See our support measures navigator for details.
2. Compensation for costs of patenting abroad: subsidies to Russian manufacturers to partly finance their costs related to intellectual property rights registration on foreign markets, in accordance with the Decree of the Government of the RF No. 1368 dated 15 December 2016.
See our support measures navigator for details.
3. Partial compensation of transportation costs: special program aimed to support manufacturers of high-tech products, i.e. to compensate up to 80% of actual costs to deliver their products to foreign markets (Decree of the Government of the RF No. 496 dated 26 April 2017).
See our support measures navigator for details.
Apart from the above support measures, the Russian Federation offers a multitude of other measures to promote Russian export. First and foremost, these include broad information and consulting support to exporters, cooperation with international organizations, eliminating tariff and non-tariff barriers to product export, support measure regarding production of export-oriented products by establishing special economic zones, technological parks, industrial parks, etc.
Tax package of export support includes value-added tax compensation on exported goods, exemption from the value-added tax on exported services, and exemption from taxes and charges on imported manufacturing equipment and parts to promote manufacturing in the Russian Federation.
