BAKU, Azerbaijan, October 8. The volume and geographical reach of non-oil and gas exports from Azerbaijan have been expanding in recent years. Ensuring the sustainability of this trend and enhancing the capabilities of exporters constitute key priorities of state policy. In this context, the decree "On additional measures to stimulate the export of non-oil and gas goods and to subsidize transportation costs" represents a significant step toward promoting exports and establishing new support mechanisms.
The decree provides for state coverage of a portion of the transportation costs incurred during the export of non-oil and gas goods of Azerbaijani origin. Specifically, the state covers up to 70% of these transportation costs. This support will reduce logistics expenses for entrepreneurs and strengthen the competitiveness of local products in foreign markets. The support measure has been in effect since September 1 of this year.
The amount of support payable to entrepreneurs will be determined based on transportation costs and customs value, taking into account the mode of transport used for the export. The calculation based on transportation costs amounts to 70% of the costs incurred for rail, air, and sea transport, as well as for cargo transported by vehicles registered in Azerbaijan, and 50% of the costs for transport by vehicles registered abroad.
The calculation based on customs value amounts to 5% of the value for sea transport and 15% for other modes of transport. The lower of the two calculated amounts is paid as the support payment.
In addition to this support mechanism, starting September 1 of this year, the state covers 70% of the transportation costs incurred for shipping non-oil and gas goods of Azerbaijani origin, produced in the Nakhchivan Autonomous Republic, to other regions of the country.
This mechanism will remain in effect for exports and domestic shipments carried out until September 30, 2036. Entrepreneurs may compile documents verifying their export or domestic transport operations and submit them to the Ministry of Economy following the end of each quarter. The support amount will be calculated based on these documents and paid to the entrepreneur.
To expand the export of non-oil and gas products originating from Azerbaijan, the state is compensating a portion of customs clearance costs starting from September 1, 2026. Exporters classified as micro, small, and medium-sized enterprises are eligible for this support. The compensation amount will be determined based on the customs clearance fee applied to the customs value of the exported goods, subject to a set ceiling per export declaration. This mechanism for compensating customs clearance costs during export will remain in effect until September 30, 2031, a total period of five years.
Additional opportunity for accessing new markets
One of the decree's key strategic outcomes is its potential to encourage Azerbaijani companies to look beyond traditional markets and target new, alternative ones. High transportation costs associated with accessing new and alternative foreign markets are among the factors that limit exporters' competitiveness. The complexity of the logistics chain and the high share of long-distance transportation costs in the product's cost price hinder the diversification of exports across both products and geographies. This mechanism creates additional opportunities for companies to test new markets.
For instance, if an entrepreneur previously deemed exporting to a certain market economically unviable due to logistics costs, this mechanism could alter that market's profitability. Thus, state support can create an additional economic incentive for the company.
Mechanism for Nakhchivan
Another significant aspect of the decree concerns the transportation of non-oil and gas goods of Azerbaijani origin, produced in the Nakhchivan Autonomous Republic, to other parts of the country. This mechanism holds particular importance for expanding production in Nakhchivan. Delivering products from Nakhchivan to other cities and districts of the country at competitive prices is also crucial. If logistics costs significantly drive up the product price, goods produced in Nakhchivan may struggle to compete in other regions. Therefore, support for domestic transportation can help Nakhchivan-based producers expand their sales reach.
The mechanism implemented for Nakhchivan shouldn’t be viewed merely as a way to reduce transportation costs for the entrepreneur; there is a broader economic objective involved. This represents a broader integration of products manufactured in Nakhchivan into Azerbaijan's domestic market. In this regard, support for domestic transportation can strengthen both Nakhchivan's production potential and its sales and supply capabilities.
Thus, the decree is a key element of the policy aimed at expanding non-oil and gas exports within the Azerbaijani economy. This mechanism has the potential to enhance the competitiveness of Azerbaijani products in foreign markets, stimulate access to new export markets, broaden the geography of exports, diversify the structure of non-oil and gas exports, and incentivize the use of local logistics capabilities.
