Incentives for industry: APDP benefits from automotive tooling manufacturers

BY JEANIQUE VAN DER MESCHT - JULY 2, 2015

Prior to 2013, Automotive Tooling Manufacturers could claim benefits from the Department of Trade and Industry (DTI) in terms of the Motor Industry Development Programme (MIDP).

However, with the phase out of the MIDP, the initial draft guidelines of the Automotive Investment Scheme (AIS) and Production Incentive (PI) under the Automotive Production Development Programme (APDP) did not make provision for any benefits to the tooling industry.

 It was only in later draft guidelines that tooling manufacturers were included to participate in the AIS and PI programmes. As result of this late inclusion, many tooling manufacturers are not aware of the benefits claimable under the APDP. With the majority of automotive tooling being imported, the South African tooling industry is on the decline.

Currently, the industry is suffering a major skills shortage as well as a lack in recapitalisation and research and development. Additional funds claimable under these incentive schemes can assist to address some of these issues.

Under the AIS, tooling manufacturers can claim between 25% and 35% back on any capital investment made to produce tooling for the automotive industry. This incentive is paid in cash. It is, however, critical that companies submit their application to the DTI prior to making the investment.

In terms of the Production Incentive, tooling manufacturers can receive benefits on the local value added in the tooling production process. This benefit is received in the form of a Production Rebate Credit Certificate (PRCC), which can be used by the tooling manufacturer to offset import duties on qualifying products or it can be sold to an importer of qualifying products.

Tooling manufacturers will qualify to claim PI benefits on both their export sales as well as local sales to component manufactures and original equipment manufacturers (OEM’s). In order to participate in the PI programme, tooling manufacturers will have to apply for an Eligible Production Certificate from the International Trade Administration Commission (ITAC). Only sales after the date of application will qualify for PI benefits.

In conclusion, we do believe that there are tooling manufacturers that are not aware of the benefits that they could be claiming under the APDP and that by accessing AIS the much needed capital investments are made more affordable whilst the PI benefits assist them to offer more competitive pricing on their locally manufactured tooling.

Call Sasfin Commercial Solutions on  041 391 0600 or visit www.sasfin.com 

 

IMAGE courtesy of www.rbs.com