The Ministry of Industry and Trade proposes to soften the approach to import substitution projects
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The Ministry of Industry and Trade is ready to provide relief to residents of industrial clusters if they took on projects to produce import-substituting products, but were unable to fulfill their stated plans due to sanctions. If production was nevertheless organized, the indicators can be adjusted, and budget subsidies are terminated without consequences – now, if the promised goals for such projects are not achieved, the investor is obliged to return the money received from the budget.
The Ministry of Industry and Trade published a draft government resolution providing for relief for participants in industrial clusters if they take on projects to produce products as part of import substitution. We are talking about a cost compensation program launched in 2016 for such investors – up to 30% of project implementation costs, but not more than 300 million rubles. From 2023, the program has new conditions that provide for reimbursement from the budget of up to 50% of the costs of purchasing initial batches of components produced by other cluster participants—up to 150 million rubles. (see “Kommersant” dated December 30, 2022).
The draft resolution for those who have entered into an agreement to receive subsidies until the end of 2023 proposes to allow adjustments to target indicators if they cannot be achieved due to sanctions. For example, the declared indicators for the volume of industrial production and its sales can be replaced by the target number of jobs created by concluding an additional agreement. Further allocation of subsidies from the budget will be stopped. To do this, it is necessary to document the impossibility of achieving indicators due to sanctions, as well as the fact of organizing the production of industrial products for the purpose of import substitution and the volume of its output.
The Ministry of Industry and Trade explained this initiative by the fact that in 2022 investors reported the risks of not achieving the stated results due to, for example, a ban on the supply of equipment and the export of final products. At the same time, the department adds, participants in industrial clusters who reported such risks have completed the main activities of joint projects – the lines have been launched, the production of import-substituting products has been organized – and, accordingly, there is no longer a need for further receipt of subsidies.
After the changes are adopted, the termination of subsidies will not result in penalties for investors – in the “usual” mode, if the stated indicators are not met, the funds allocated by the budget must be returned, and in a fairly short time. Note that the mechanism for supporting participants in industrial clusters provides for some concessions in case of sanctions, but not so significant: this is the opportunity to reduce the semi-annual values of performance indicators necessary to achieve the results of receiving a subsidy, or to extend the project implementation period by a maximum of a year.
Director of the Association of Clusters, Technoparks and Special Economic Zones of Russia Andrey Shpilenko considers the initiative extremely relevant for participants in industrial clusters, although he notes “not the fastest response to business aspirations” – many investors were expecting such a decision a year or two ago. “When market conditions change and Russian organizations, for example, stop receiving imported components, materials and equipment, this leads to the fact that the business is innocently to blame: investors received subsidies, assumed obligations, began to implement projects, but many, due to force – major circumstances ended up in a situation where the project was not started on time or was not implemented to the end,” he explains. Such circumstances, says Andrei Shpilenko, were not taken into account in any way: the target indicators remained the same, and if they were not achieved, the investor was obliged to return the subsidy in full.
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