Production Incentive

The Production Incentive Programme (PIP) is a cash-based tax-free incentive grant available to those companies engaged in:

1. Clothing manufacturing
2. Textile manufacturing
3. Footwear
4. CMT and
5. Non-Automotive Leather Industries

Production Incentive Programme (PIP)

The PIP aims to help the industry upgrade its processes, products and people. This is expected to move the industry up the value chain to activities that are far more sustainable than competing against “sweatshop” labour practices and pervasive government subsidisation in other developing countries. The PIP is meant to encourage and support upgrading and competitiveness improvement programmes in the sector.

The PIP 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 The PIP is a market-neutral incentive resulting in an incentive benefit equal to 7.5% for the year based on a company’s Manufacturing Value Addition (MVA). The MVA calculation must be based on audited financial statements not older than 15 months.

It is a cash based, tax free incentive grant, focused on textile / footwear / CMT and
leather manufacturers to improve overall competitiveness in these industries.

• The Production Incentive is aimed at structurally changing the Clothing, Textiles, Footwear, Leather & Leather Goods manufacturing industries by providing funding assistance to invest in competitiveness improvement interventions.

• The Production Incentive consists of a combination 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.

• The MVA calculation must be independently verified by the company‟s auditors and the auditors‟ confirmation letter submitted to the CTCP Desk together with the benefit application.

• A confirmation of the approved Benefit Ceiling will be issued to qualifying applicants. The amount available under the Benefit Ceiling can only be accessed on presentation of proof of qualifying expenditure to the satisfaction of the CTCP Desk, and/or the acceptance of liability for interest charges on a working capital loan obtained from the IDC or any reputable financial institution.

The PIP is available to the following (collectively referred to as the “the sector”):

• Clothing manufacturers;
• Textile manufacturers;
• Cut, Make and Trim (CMT) operators;
• Footwear manufacturers;
• Leather goods manufacturers and
• Leather processors (Specifically for Leather Goods and Footwear industries).
• Design Houses (Provided the design house partners with one or more CMT‟s)

Should you be interested in applying for the incentive, Dream Team Capital can assist you. Contact us today for professional assistance in streamlining your application for the Production Incentive.