November 8, 2018 / 4:05 AM / a year ago

Brazil lower house passes new auto industry incentive plan Rota 2030

BRASILIA, Nov 7 (Reuters) - Brazil's lower house of Congress on Wednesday passed a new program for the auto industry that provides incentives for local companies that improve the fuel efficiency and safety of their vehicles and invest in research and development.

The so-called Rota 2030 program will run for 15 years and provide tax credits over the next five years estimated to total 2.1 billion reais ($560 million) in 2019 and 1.5 billion reais in 2020. The bill must still win approval in the Senate.

The program lowers by at least 3 percentage points the tax on industrial products applied to vehicles that have hybrid or "flex" motors that run both gasoline and ethanol.

The bill has been long-awaited by the auto industry that was one of the hardest-hit sectors of the Brazilian economy during the recent two-year recession which saw car sales plummet.

The bill renews the incentives for the car industry to have assembly plants in the poorer Northeast region of Brazil, where Ford Motor Co and Fiat have factories.

ROTA 2030, which would go into effect next year, will exclude vehicle importers, which the government had included in the bill to avoid any complaints at the World Trade Organization (WTO).

The previous auto industry incentive program called Inovar-Auto that expired last year was criticized by the WTO for giving unfair advantages to local car makers. (Reporting by Maria Carolina Marcello; editing by Darren Schuettler)

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