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The transport subsidy scheme was a scheme introduced to promote industrialisation in remote, hilly and inaccessible areas. As the name suggests, the scheme seeks to subsidise the transport of goods in these areas, incentivising businesses to save transport costs. This helped businesses survive the competition with other similar industries, which are geographically located in better areas.


Transport subsidy scheme explained

The Transport subsidy scheme was introduced in 1971. The scheme identified remote, hilly and inaccessible areas of the country and provided subsidy for the transportation cost incurred by industrial units situated in these locations.

The subsidy scheme covered eight states of the Northeast; Himachal Pradesh, Uttarakhand, Jammu and Kashmir, Darjeeling district of West Bengal, Andaman & Nicobar administration and the Lakshadweep administration.

Under the scheme a subsidy of 50% and 90% on transportation costs was rolled out for the transportation of raw material and finished goods respectively to and from the location of the unit and the designated railway station.

For Northeast states, Jammu & Kashmir and Union Territories, the subsidy is 90%. For Himachal Pradesh, Uttarakhand and Darjeeling district of West Bengal, the subsidy is 75%. However, for movement of goods within the northeast region the subsidy is 50% on finished goods and 90% on raw material.

The transport subsidy scheme was modified and notified as “Freight Subsidy Scheme (FSS) – 2013”. The scheme was discontinued in 2016. However, all industrial units registered under the scheme prior to the date of discontinuation, November 22, 2016, will be eligible for the benefits of the residual period under the scheme.

Also read: What is transit insurance? Meaning, types, cost of policy

Eligibility for the scheme

The scheme was applicable to all industrial units located in the areas mentioned under the scheme for the transport of raw materials and finished goods. Plantations, refineries and power generation plants both in public and private sectors couldn’t apply for the scheme.

The subsidy was made eligible to a unit for a maximum period of five years from the date of commencement of commercial production.

Applying to the transport subsidy scheme

Applications were made to the District Industries Centre (DIC) under the Department of Industries of the respective states. A form of application was downloaded from the DPIIT website, filled and submitted to the DIC of various districts. Businesses also had to attach the relevant documents mentioned in the guidelines of the policy.

Here are some of the mandatory documents that were to be submitted with the application form:

  • Registration certificate under Companies Act and Memorandum of Article of Association in case of private limited/public limited company
  • Deed of partnership and general power of attorney in case of a partnership firm
  • Registration certificate from the Joint Register of cooperative society, the resolution of the general body of the registration of the unit and Article of Memorandum of Association in case of Cooperative Society.
  • Permanent registration/Entrepreneurs Memorandum. Part 2/IEM/LI/IL.
  • Certificate of mandatory/obligatory registration/approval from the concerned department as applicable in case of a service unit.
  • Project Report.
  • Mandatory No Objection Certificate from Local Bodies slash Authority (eg; Pollution Control Board, etc.)
  • Term loan sanction letter from the respective financial institution. Gift deed.
  • Purchase deed/gift deed/any other document to establish the ownership of land
  • Deed of agreement and up-to-date rent receipts in case of industrial land allotted by any government agency.
  • Registered lease deed in case of leasehold land from a private owner.
  • Power sanction letter from State Electricity board/competent authority.
  • List of employees with name, address and designation.
  • Audited balance sheet for the last three accounting years

The disbursement of the subsidy to the eligible industrial units was made through the nodal agencies appointed by Department of Insutries. These were

  • North East Development Financial Corporation (NEDFi), Guwahati for North Eastern Region
  • JKDFC for Jammu & Kashmir
  • HPSIDC for Himachal Pradesh
  • SIDCUL for Uttarakhand

Logistics is a struggle when there are rough terrains like mountains and hilly regions where access via road and air remains a problem. India has launched National Logistics policy to help improve the efficiency of transport systems by promoting the development of multimodal interconnected infrastructure.

The policy seeks to address issues such as logistics capacity, last-mile connectivity gaps, ground-level logistics operation, and infrastructure. It will utilise the PM GatiShakti National Master Plan (PMGS NMP) to monitor various components of the logistics ecosystem.

Priyanka Babu

Priyanka is a seasoned content marketing professional with 6 years of experience crafting various forms of business and technology sector content. Her insightful writing tackles critical issues faced by small-scale manufacturing businesses. Swati’s clear and concise communication empowers businesses to make informed decisions and thrive in today’s dynamic business environment.