The DTI’s Textile Grant Explained

Updated on 14 August 2014

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The DTI's textile grant explained

To help combat the decline in the South African textile industry, including the loss of jobs and revenue, the Department of Trade and Industry (DTI) established a Clothing and Textiles grant.

Competitiveness Programme (CTCP) – a five-year plan which is aimed at structurally changing the clothing, textiles, footwear, leather and leather goods manufacturing industries.

The R200-million grant fund seeks to provide funding assistance for these sectors to invest in competitiveness improvement interventions.

It will assist the textile industry in upgrading processes, products and people to re-position it so that it competes effectively against other low-cost producing countries, and also stabilize local employment.

The guidelines of the Production Incentive Programme for the years 2014/15 were made public in April this year.

How the programme works

The Competitive Improvement Programme (CIP) will require a network of companies (a cluster) to work together to improve the competitiveness of the network by including as many best practice elements that constitute successful clusters as possible.

The programme is based on the belief that competitiveness improvement is best achieved through value-chain networking and partnerships.

It would also work towards maximising production capacity development and value-added processing of local raw materials starting with cotton and then broadening its scope to include all other natural and synthetic fibres.

How the clusters work

The programme is based on cluster formation of either similar manufacturing entities or a value chain cluster, comprising manufacturers, suppliers and retailers to engage in collective improvement activities.

The clusters are separate legal entities registered as not-for-profit companies that provide the regulatory foundation for financial management and project implementation.

Clusters are divided into two categories, with an ordinary cluster being a group of at least five manufacturing companies or a combination of manufacturing and related organisations (e.g. retailers, design houses, component manufacturers) that are jointly working towards obtaining mutually beneficial objectives, and a national cluster coordinated by a national structure.

All members of the clusters commit themselves to a financial contribution towards the activities.

The programme incentives

For ordinary clusters, the incentive programme provides investment support to registered entities by offering a cost-sharing grant incentive of 75% of the qualifying project costs. The remaining 25% comes from the cluster participants.

However, the incentives do not cover costs of machinery, equipment, commercial vehicles, land or buildings and grant support for each approved partnership is limited to a cumulative ceiling of R25 million throughout the programme’s implementation.

For national clusters, the incentive provides investment support by offering an initial investment grant of 100% for the first year, where after it becomes a cost-sharing grant of 95% from the incentive programme and 5% from cluster participants in the second year, and depreciates accordingly on that rate for five years.

Read Also: DTI Funding for Small Business

Who is eligible to benefit

Incentives are available to clothing manufacturers, textile manufacturers, cut, make and trim (CMT) operators, footwear manufacturers, leather goods manufacturers, leather processors (specifically for leather goods and footwear industries) and design houses (provided the design house partners with one or more CMT’s).

Who is excluded

The Production Incentive Programme specifically excludes goods manufactured for the automotive sector which qualifies for any incentive programme offered for that sector.

Preference is given to cluster projects that are based on world-class manufacturing principles and which take a holistic approach targeting all four of the intervention elements: people, process, product and market development.

How to apply

Applications have to be submitted to the CTCP Desk before 31 January 2015 and no fees or charges are levied for the processing or evaluation of any CIP application or claim.

Image source: Wendy Verwey Bekker via Flickr

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