Edinburgh Military Tattoo's plans for a new £16m Castle Esplanade replacement grandstand have received a £3m boost by the Scottish Government and Scottish Enterprise.

New seating accommodation, corporate hospitality facilities and improved retail and rest areas will form part of the facility, which is expected to take less time to construct and dismantle and is set to be in place by August 2011.

It will replace the existing 35-year-old Tattoo grandstands, which were based on the Mero system used at the 1972 Munich Olympic Games, while also helping to meet the city's longer-term entertainment needs.

The latest funding matches the £3m committed by the City of Edinburgh Council for the new stand, while a preferential low-interest £6m loan agreement has also been secured by the local authority on the Tattoo's behalf. The remaining £4m will come from the Tattoo's revenues.

Scottish culture minister Fiona Hyslop said: "This funding - from the Scottish Government and Scottish Enterprise - will reinvigorate the Tattoo, providing a new and improved arena for spectators and performers alike which will further enhance our reputation, maintaining Edinburgh's position as the world's pre-eminent festival city."

Scottish Enterprise regional director Linda McPherson added: "The Edinburgh Military Tattoo is one of Scotland's largest tourism opportunities, attracting 80 per cent of its 220,000 annual audience from outwith Scotland, and generating tens of millions for the Scottish economy each year."