Dti approves guidelines for AIS

Thursday, June 3, 2010

Pretoria - Trade and Industry Minister Rob Davies has approved the guidelines of the Automotive Investment Scheme (AIS) which is aimed at growing and developing the sector.

The AIS is part of the Automotive Production and Development Programme (APDP) intended to replace the Motor Industry Development Programme (MIDP) in 2012.

The scheme replaces the Productive Assets Allowance scheme (PAA) of the MIDP which elapsed in December last year.

The intention of the AIS is to grow and develop the automotive sector through investment in new and replacement models as well as the manufacturing of automotive components of which the objective is to increase plant production volumes, sustain employment and the strengthening of the automotive value chain.

The scheme will provide qualifying firms with a taxable cash grant of 20 percent of the value of qualifying investment in productive assets.

In order for firms to qualify for the grant, a light motor vehicle manufacturer must introduce a new or replacement model as well as demonstrate that it will achieve a minimum of 50,000 annual units of production per plant within three years.

A component manufacturer must prove that a contract has been awarded for the manufacture of components to supply into the Light Motor Vehicle Manufacturing supply chain, and that the investment will achieve at least 25 percent of total entity turnover from the supply chain.

The department said an additional taxable cash grant of five or 10 percent over and above the 20 percent taxable cash grant is available to projects that show that the investment will result in base year employment levels being maintained throughout the incentive period.

Companies must also demonstrate that the investment will result substantial support for the local tooling industry among other things.

The department says the AIS (which has been allocated budgeted R2.69 billion for the next three years) will be available for projects that started production with effect from 1 July 2009.

Application forms for the scheme will be available on the department's website www.dti.gov.za from 14 June 2010.