The Department of Trade and Industry (DTI) in South Africa has created two incentive schemes to assist manufacturers in the Clothing and Textiles (including Leather and Footwear) sectors. Both schemes are administered by the Industrial Development Corporation (IDC) and are aimed at creating sustainable capabilities and employment in these sectors. These schemes will run until 2015 and eligible companies may apply annually for assistance. The incentive takes the form of a cash grant paid directly to the applicant by the IDC.
Production Incentive (PI)
The PI is an incentive offered to Clothing, Textile, Leather and Footwear Manufacturers based on 7.5% of a company’s Manufacturing Value Addition (MVA) which is calculated on the company’s most recent annual financial statements. The MVA is calculated as follows:
Sales Value of Goods Manufactured Outside of South Africa
Material Input Costs (Used in the Manufacturing Process)
Outsourced CMT Costs
The applicant can utilise the grant for one of the following:
To pay for all, or a portion of, Machinery & Equipment purchased since 01 April 2011.
To pay for all, or a portion of, Machinery & Equipment purchases to be made over the next 24 months.
To pay the interest on an existing company loan made from a financial institution.
To pay the interest on a future company loan to be made from a financial institution.
To pay a portion of the company’s required 35% contribution under the Competitiveness Improvement Programme (CIP) – discussed below. The PI can be used to fund 26.25% of the required 35%, thus the company needs only to contribute 8.75% from its own funds.
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