Manufacturing Investment Programme (MIP) Overview
The Department of Trade, Industry and Competition launched the Manufacturing Investment Programme (MIP) to stimulate investment growth in South Africa’s manufacturing sector. This initiative aligns with the National Industrial Policy Framework and aims to strengthen industrial development while encouraging productive investment.
The MIP primarily focuses on increasing investment within manufacturing. It supports small enterprises and medium-to-large manufacturers, particularly projects that may not proceed without financial backing.
Purpose and Strategic Focus of the Manufacturing Investment Programme
The programme seeks to improve the sustainability of manufacturing projects. For small enterprises, it reduces financial risk. Simultaneously, it helps medium and large manufacturers expand operations and modernise facilities.
MIP provides grants to both local and foreign-owned entities. It funds qualifying investments in machinery, equipment, commercial vehicles, land, and buildings. These investments must establish new production facilities, expand existing plants, or upgrade clothing and textile production capabilities.
Grant Structure and Funding
MIP offers grant levels based on project size.
Small Projects (R5 million or below):</strong> The dtic provides a grant equal to 30% of total qualifying investment costs, payable over three years.
Medium-to-Large Projects (Above R5 million): Grants range between 15% and 30%, calculated on a regressive scale, payable over two years. Total grants cannot exceed R30 million.
Foreign Investments: Foreign investors may qualify for an additional relocation grant. This covers the lower of 15% of the imported machinery value or the actual transport cost of relocating machinery to South Africa, capped at R10 million.
MIP complements existing tax incentives under the Income Tax Act 58 of 1962, such as accelerated depreciation, graduated tax rates for small enterprises, and R&D allowances.
Mandatory Conditions
Applicants must register as legal entities under the Companies Act, Close Corporations Act, or Co-operatives Act. Not-for-profit organisations cannot apply.
If a sole proprietor, partnership, or trust converts to a registered entity for an expansion project, the applicant must submit financial statements from the previous structure, approved by the South African Revenue Service.
>Applicants must remain in good standing with SARS and provide a valid tax clearance certificate. Projects must involve a new facility, expansion, or upgrading in clothing and textiles. Qualifying investment in machinery, equipment, land, buildings, and commercial vehicles is capped at R200 million.
Projects must fall under manufacturing classification (SIC code 3) and comply with all relevant South African legislation. Employers must pay gazetted minimum wages.
Application and Approval Process for the Manufacturing Investment Programme
Applicants must obtain approval from the dtic before commissioning qualifying assets. Starting production prior to approval renders the project non-qualifying.
Applications may be submitted between three and twelve months before the planned production start date. If the dtic has not responded after three months, applicants may proceed with production but must notify the dtic in writing.</p>
>For machinery with lead times exceeding 12 months, the dtic may consider earlier applications. Applicants must provide written confirmation from suppliers specifying delivery timelines.
Evaluation Criteria
Small Projects (≤ R5 million): Applicants must demonstrate project commitment, adequate financing, and evidence of funding from financiers. Projects must be financially viable and show how the grant improves viability. Business plans must include market analysis, competitive advantage, technology, marketing, and management. Projects must score at least 50 points in contribution to industrial policy targets, including B-BBEE compliance and jobs created per million Rand invested.</p>
>Medium-to-Large Projects (> R5 million): Applicants must demonstrate that the grant is essential to proceed and explore alternative funding sources first. Projects must achieve at least four points for economic benefit criteria, including priority sector investment, job creation, B-BBEE compliance, and location impact.</p>
>Qualifying assets include new or second-hand machinery, equipment, commercial vehicles (for production use), and land/buildings directly associated with production. Vehicles may not exceed 20% of total qualifying investment in machinery and equipment. Second-hand assets must meet strict technology and arm’s-length purchase conditions
Additional Conditions for Expansion Projects
The expansion must not reduce existing personnel levels during the incentive period. Audited or management accounts for the base year must support claims.
>Textile and Clothing Sector Upgrades: Projects must show a minimum 10% increase in qualifying machinery and equipment investments in year one. Grant funds must improve or sustain competitiveness, measured through value-add, productivity, cost reduction, or product mix. Applicants must indicate the project’s employment impact.
Professional Support
The Manufacturing Investment Programme provides significant financial support for qualifying manufacturers. However, applicants must comply with structural, financial, and operational requirements.
Contact us today for professional guidance to prepare and submit a successful MIP application.
