The Italian government has won permission from the European Commission to grant interest rate subsidies to companies producing 'green' auto parts.

The European Commission said the scheme, with a budget of EUR300m (US$450m), would promote a move towards more environmentally friendly products.

"The Italian measure will help companies to shift their business model in accordance with EU environmental objectives, without unduly distorting competition," EU competition commissioner Neelie Kroes said in a statement cited by Reuters.

The scheme will focus on financing investments related to early adaptation of the Euro 6 emissions standard for light passenger and commercial vehicles.

Subsidised loans may be granted until December next year and the reduced rate will apply for up to two years.

The reduction will not exceed 50% for small and medium-sized enterprises and 25% for large businesses.