Italy has been granted permission by the European Commission (EC) to award EUR16m (US$19.2m) to Fiat Powertrain Technologies (FPT).

The money will be used to produce transmissions in Verrone, Italy, with the plant equipped with new machinery, heat treatment and assembly lines for mid-range vehicles.

Some 600 new jobs are expected to created following the new investment once full production is reached in 2013.

"In these difficult times, innovating and creating jobs is of utmost importance," said commission vice president and competition commissioner Joaquín Almunia.

Fiat Powertrain's investment project is expected to achieve this without unduly distorting competition.