Industrial Initiatives - France
The French government's strategic plan to revitalize its industrial sector indicates that it has four overarching initiatives to financially support the implementation of said plan. These four overarching financial support initiatives are the Projets Industriels D'Avenir (PIAVE), Sociétés de Projets Industriels (SPI), the Industry of the Future tax incentive, and the Industry of the Future loans. These financial support initiatives, which are a mix of grants, investments, higher depreciation allowances, and soft, unsecured loans, are targeted at small and medium-sized enterprises and intermediate-sized enterprises.
PROJETS INDUSTRIELS D'AVENIR (PIAVE)
- PIAVE, which, in English, stands for Industrial Projects for the Future, is a government-funded financial support initiative that comes in the form of "grants and recoverable advances" and is offered to eligible projects in the industrial sector.
- Eligible projects include only those that have an expenditure budget of at least €3 million and that offer prospects with respect to the nine solutions the French government had outlined in its strategic plan for the industrial sector.
- The nine industrial solutions and the industries they encompass are as follows: new resources (eco-industries, chemicals, materials, extraction, primary processing), smart ciities (eco-industries), eco-mobility (automotive), tomorrow's transport (aerospace, naval, rail), smart food choices (agribusiness), data economy (digital), smart devices (digital, consumer goods), digital confidence (digital), medicine of the future (health).
- Projects should have the purpose of either industrializing a new product, process, or service or strengthening the competitiveness of an existing segment of the industrial sector. Projects that aim to make an existing segment more competitive should demonstrate a significant contribution to small and medium- or intermediate-sized businesses.
- The most recent call for projects took place last January 18, 2016 - July 28, 2017, but a new call for projects opened last October 9, 2018 and will end on June 12, 2019. This newly opened call for projects, however, is open only to companies that are affected by the shrinking diesel sector.
- With this new call for projects, the French government aims to "offset the decline in sales and jobs related to diesel" and to promote diversification of products, processes, or services. The goal is the smooth transition from the diesel segment to a new industrial activity.
- For this new call for projects, only projects with an estimated expenditure of €500,000 to €5 million and a maximum duration of 2 years are eligible. A project should be handled by a single company only.
- Awardees will be selected based on their ability to execute the project, the project's economic impact, and the project's contribution to the diversification and transition program.
- The PIAVE is administered by public investment bank Bpifrance under the supervision of the General Secretariat for Investment.
- France's Ministry of Economy and Finance notes PIAVE as one of the country's financing initiatives to "develop cutting-edge technologies" in the industrial sector. The development of these cutting-edge technologies is one of the five pillars of France's The Industry of the Future project.
SOCIÉTÉS DE PROJETS INDUSTRIELS (spi)
- SPI, which, in English, stands for Industrial Projects Companies, is an €800-million investment fund of the government that provides financial support in the form of venture capital or minority stakes. Also managed by Bpifrance, it is funded by the government's broader Programme d’Investissement d’Avenir or Future Investment Program (PIA), which funds projects across sectors including the industrial sector, and the European Investment Bank (EIB).
- France's Ministry of Economy and Finance notes SPI as one of the country's financing initiatives to "develop cutting-edge technologies" in the industrial sector. The development of these cutting-edge technologies is one of the five pillars of France's The Industry of the Future project.
- Only industrial projects that align with the 34 plans listed in France's Industry of the Future project are considered.
- Examples of projects that are considered for investment include the development of shared industrial sites, the development of industrial equipment, the expansion of production capacities, and the development of export-quality products.
- Projects that are selected typically have reasonable profitability-to-risk ratios and strong environmental, social, and corporate governance (ESG).
- Amount invested ranges from €10 million to €160 million.
- The fund, which was created in 2015, has a life of 12 years, but there is a possibility that the fund life will be extended. Investment typically spans five years but can be extended as well.
INDUSTRY OF THE FUTURE TAX INCENTIVE
- This tax incentive is a higher depreciation allowance on industrial investments made between April 15, 2015, and April 14, 2017. These higher depreciation allowances span a period of six years.
- The higher depreciation allowance covers at most 13% of the investment made.
- Covered industrial investments include those meant to expand production capacity or modernize business models.
- The tax incentive, initially, was supposed to cover only industrial investments made between April 15, 2015, and April 14, 2016, but the duration was extended on April 14, 2016, to cover investments made until April 14, 2017.
- France's Ministry of Economy and Finance notes the tax incentive as one of the country's financial support initiatives to "help companies adapt to the new paradigm" in the industrial sector. This adaptation is one of the five pillars of France's The Industry of the Future project.
- France's Ministry of Economy and Finance estimates that the tax incentives over the six-year period, when combined, will amount to €5 billion.
INDUSTRY OF THE FUTURE LOANS
- The Industry of the Future Loans are soft, unsecured loans that Bpifrance grants to small and medium-sized enterprises (SMEs) and mid-tier enterprises. Loan repayment can be deferred by two years.
- They can be used to finance low-collateral, "innovative and high-powered investment in production capacities." Bpifrance notes that they can also be used to finance the introduction of new products or processes.
- Only SMEs and intermediate-sized enterprises in the manufacturing industry that are financially sound and have been operating for over three years are eligible to avail of the loan.
- Loanable amount ranges from €500,000 to €5 million, and loan term can range from 3 to 10 years.
- The loan amount should be matched with external financing at a ratio of 1:1. External financing can be in the form of capital or quasi-equity contributions or bank loans with a similar duration.
- The Ministry of Economy and Finance notes the tax incentive as one of France's financial support initiatives to "help companies adapt to the new paradigm" in the industrial sector. This adaptation is one of the five pillars of France's The Industry of the Future project.
- The French government originally allotted a total of €2.2 billion for this initiative but announced an extra tranche of €1.1 billion, which the government noted will be available in 2018.
- As of June 2016, Bpifrance had already granted 851 Industry of the Future loans amounting to €719 million.
As suggested, we began by identifying the government agency in France that is responsible for the economic development of the country, which we found from the French government website to be the Ministry of Economy and Finance. Scouring the website of the Ministry of Economy and Finance, we learned that the French government had released reports in 2015 and 2016 that outline France's strategic plan to revitalize its industrial sector. Entitled "Industry of the Future" and "New Industrial France," the reports detail how the plan was, is, or will be supported financially by the government. These were the latest and most authoritative reports we found on the subject, even after searching in French and reviewing the websites of other closely related agencies such as those in charge of tax, research, or innovation. To determine which of the financial support initiatives listed in the reports are still active or ongoing, we researched said financial support initiatives one by one. The Google Translate extension was used to automatically translate pages to English.