Grants and Incentives available to Clothing, Textiles and Footwear Industry
In order for companies in the clothing and textiles sectors to be in a position to compete with international competitors in the domestic and international markets, it is essential that they advance their operational competitiveness to world class performance levels. The dti has therefore developed a Clothing and Textiles Competitiveness Programme (CTCP). This is comprised of the following elements:
Capital Upgrading Programme –EIP/MIP
Preferential Loans from the IDC
Clothing and Textiles Competitiveness Improvement Programme (CTCIP)
Production Incentive Programme
Each of these programmes is discussed below. Please download the full guidelines to these programmes on the right hand side of this page.
Capital Upgrading Programme
Purpose
The DTI has initiated the Manufacturing Investment Programme (MIP), an investment incentive designed to stimulate investment growth, in line with the SA government’s national industrial Policy Framework. The primary objective of the MIP is to stimulate investment within manufacturing.
Programme Description
The MIP provides investment support to both local and foreign owned entities by offering an investment grant of up to 30% of the value of qualifying investment costs in machinery, equipment, commercial vehicles, land and building, required for establishing a new production facility, expanding an existing production facility; or upgrading production capability in an existing clothing and textile production facility. Investment projects of R5 million and below may qualify for an investment grant equal to 30% of their total qualifying investment cost, payable over a three year period. Investment projects of over R5 million may qualify for an investment grant of between 15% and 30% of their qualifying investment costs, calculated on a regressive scale. The investment grant cannot exceed R30m. This programme is being administered by the dti.
Mandatory Conditions
In order to apply for this incentive companies must:
• Be a legal entity. Section 21 companies, not for profit or gain companies are excluded from applying
• Provide a valid tax clearance certificate
• The project for which the company is applying must constitute a new production facility, expansion of an existing production facility or upgrading of production capability. The cost of the qualifying investment in machinery, equipment, land and buildings, and commercial vehicles will be capped at R200m
• The project must be for manufacturing
• Projects should apply and receive approval from the dti before investment assets are taken into production.
• The projects must achieve a minimum score of fifty for contribution to industrial policy targets
• For projects above R5m in value, the companies must demonstrate how the grant is necessary for the project to proceed, and the project must achieve a minimum score of four points to industrial policy targets
Contact Details:
The dti
James Mahlangu - Assistant Director - 012 394 1062
Agnes Tsele - Director - 012 394-1123
Francois Truter - Chief-Director - 012 394-1413
Back to the top
Preferential loans from IDC
A preferential loan scheme for the clothing and textiles sector (via the IDC) is also available for capital upgrading aimed at competitiveness improvement at prime less 5% Working capital loans are also available at an interest rate to be determined per applicant. More details can be obtained from Willie Fourie at the IDC – details below.
PREFERENTIAL FINANCING
Willie Fourie, SBU Head: Clothing & Textiles, IDC
Tel: 011 269-3973
Email: willief@idc.co.za
Clothing and Textiles Competitiveness Improvement Programme
Purpose
The purpose of the Clothing and Textiles Competitiveness Improvement Programme (CTCIP) is to build capacity in manufacturers and in other areas of the apparel value chain in South Africa to effectively supply their customers, for example major retailers, government and other niche markets. The aim is to create a group of globally competitive clothing and textile companies that would ensure a sustainable environment that will retain and grow employment levels. The CTCIP is available to single companies or clusters. The programme is aimed at mostly large companies where firms have made single firm applications as these firms are likely to have the internal capacity to manage and implement the bulk of the proposed competitiveness improvement interventions. The aim is that smaller companies should rather access this programme through a cluster in order to pool resources and ensure they have the capacity to implement the proposed interventions. Smaller companies are however not precluded from applying; they just have to clearly identify how they plan to implement the competitiveness programme. The programme starts as of 1 April 2009 and expires at the end of March 2014.
Programme Description
The incentive programme aims to subsidise competitiveness improvement activities in clothing and textile manufacturers that would otherwise not be able to finance these interventions. The scheme includes supplier and/or customer organisations to these entities. The competitiveness grants will be provided for competitiveness improvements that are focussed on the development of manufacturing entities. These interventions include: manufacturing related interventions to reduce cost structures or efficiency and effectiveness and supply chain interventions to integrate the manufacturing entities with upstream and downstream entities in the value chain. Typical types of interventions which can be funded by this incentive scheme include: Training, labour relations and employee wellness programmes, product related supply chain integration, industrial engineering services, competitiveness improvement interventions, world class manufacturing principles, bottom-line business processes. These incentives will not cover costs pertaining to machinery, equipment, rent, hardware, staff costs, working capital, commercial vehicles, land or building. Furthermore, competitiveness improvement interventions should not be general purpose in character e.g. General management. They should be specialised and tailored to the specific requirements of the organisation.
For individual company applications:
The incentive scheme provides support to both local and foreign owned entities by offering a cost-sharing grant incentive of 75% of project cost on cluster projects and 65% of project cost for company-level projects. Grant support for each company is limited to a cumulative ceiling of R2.5 million over the five year period of the programme implementation.
For Cluster Applications:
Grant support for clusters is limited to a cumulative ceiling of R25 million over the five year period of the programme. In cluster applications, cluster members are free to decide amoungst themselves the relative size of each partnership membership’s financial contribution to the partnership.
Mandatory Conditions
For company level applications the applicants must:
• Be a registered legal entity
• Have a valid tax clearance certificate
• Be a manufacturer
• Be bargaining council compliant and produce a letter or certificate to this effect
For cluster level applications the cluster must:
• A eligible cluster should have five or more members who are registered taxpaying entities
• a registered Section 21 company
• Applicants in cluster must provide tax clearance certificates and be bargaining council compliant
• The major portion (75% or more) of companies participating in the project should be manufacturing, the rest can be design, research and education related entities
Contact Details:
Programme Manager at IDC
Mr. Joy Balepile
Tel: 011 269 3762
Fax: 011 269 3126
Email: joyb@idc.co.za
Production Incentive Programme
Purpose
The PI is aimed at structurally changing the Clothing, Textiles, Footwear, Leather and Leather goods manufacturing industries by providing funding assistance for these sectors to invest in competitiveness improvement interventions. It is meant to encourage and support upgrading and competitiveness improvement programmes in the sector. It forms part overall Clothing and Textiles Competitiveness Improvement Programme. The programme will run for a period of 5 years until 31 March 2015.
Programme Description
The PI consists of an Upgrade Grant Facility, which is meant to focus on competitiveness improvement and an Interest Subsidy for Working Capital Facility which is meant to support working capital requirements resulting from past and future upgrading interventions. It is a market-neutral incentive offered to the subsectors listed above, resulting in an incentive benefit equal to 10% for the year ending March 2011 of a company’s Manufacturing Value Added (MVA).
The MVA is calculated as follows:
MVA = Sales (Goods manufactured locally by the company only) – Material Costs (Used in the manufacturing process
The benefit thus determined is the benefit ceiling which is the maximum benefit that a firm can obtain from the PI programme in a specific financial year.
The applicant can decide whether to use the PI for the Upgrade Facility or Interest Facility or a combination of both but the benefit may not exceed the benefit ceiling.
Upgrade Grant Facility
An upgrade grant is to provide financial support to the industry to assist in it attaining higher levels of competitiveness. It can be used for: upgrading equipment, developing people, improving manufacturing processes, optimising materials used or developing new products. Furthermore, companies can use it towards funding their own contribution of 25% (single firm applications) or 35% (cluster applications) required in terms of CTCIP up to a maximum of 85% for SMEs and 75% for others. The upgrading grants will only be provided if they can be linked directly to productivity and competitiveness improvement activities. The expenditures must be motivated by a business plan. The following are examples of costs that do not qualify under the Upgrade grant: Normal operating costs, staff costs, upgrading of vehicles. When redeeming an application for upgrading, invoices should not be older than 12 months from date of issuance, with the exception of the first year of the programme where invoices from 1st April 2009 onwards will be accepted.
Interest Subsidy Facility
The aim of the interest subsidy is to provide working capital for firms. An interest subsidy equal to the ruling prime interest rate will be made available. For example if a company’s benefit ceiling is R1 million and they want to use this for the interest subsidy facility, then at an example current prime lending rate of 10% this would equate to R10 000 000 working capital available for application with the IDC. When applying, companies will still have to ensure economic merit of the application. The IDCs minimum funding amount of R1 million will apply.
Mandatory Conditions:
Firms need to have the following in order to apply for the benefit from the PI programme:
o Must be a registered legal entity
o Have a valid tax clearance certificate
o Must be Manufacturers
o Must be Bargaining council compliant
o Must comply with environmental regulations (where applicable)
o Provide information on any pending litigation with the firm
o Application information must be based on Audited Financial Statements not older than 15 months
Contact Details:
Programme Manager at IDC
Mr. Joy Balepile
Tel: 011 269 3762
Fax: 011 269 3126
Email: joyb@idc.co.za
© KZNCTC 2010.All rights reserved. Design by Electric Landscape |
 |