Brazil's Local Content Requirement
The Brazilian National Development Bank (BNDES) reduces local content requirements of machinery and equipment from 60 to 30 percent.
The BNDES Nationalization Index, enforced since 1973, has been replaced by the Accreditation Index in what is considered a historic change in the local content methodology.
The update, in response to local industry associations’ requests, e.g. the Brazilian Machinery Manufacturers Builders’ Association, aims to reduce the LCR for products acquired with BNDES financing from 60 to 30 percent. This pan-industrial sector regulation will also apply to research and development.
BNDES, previously, required products, in value and weight, with at least 60 percent of national raw materials. Today, the new methodology drops the LCR to 30 percent. This will be measured by the Product Structure Index to feature technological content, innovation, export viability, direct labor and services as well as value added.
Until November 2018, BNDES had a catalog of approximately 38,000 products accredited by about 4,800 companies. Though the prior product list will remain active, if a company - Brazilian or foreign - adds more products to the catalog, it may apply directly to BNDES for inclusion.
The regulation will enable an increase in imports, thus, potentially, benefiting U.S. exporters.
For more information, please contact: Patrick Levy, U.S. Commercial Service, Rio de Janeiro, Brazil