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Transport Subsidy Scheme

Topics Covered:

  1. Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
  2. Infrastructure: Energy, Ports, Roads, Airports, Railways, etc.


Transport Subsidy Scheme


Context: To facilitate the process of industrialization in hilly, remote and inaccessible areas, transport incentive is provided to the states of:

  • North Eastern Region (including Sikkim) under North Eastern Industrial Development Scheme (NEIDS) – 2017
  • Jammu & Kashmir under Industrial Development Scheme – 2017
  • Lakshadweep and A&N Islands under Lakshadweep and Andaman & Nicobar Island Development Scheme – 2018

Industrial Units can avail Incentives:

Under the above mentioned schemes, all eligible industrial units can avail incentive on transportation of only finished goods through Railways or the Railway Public Sector Undertakings, Inland Waterways or scheduled airline (shipping for Andaman & Nicobar and Lakshadweep islands also) for five years from the date of commencement of commercial production/operation.


Freight Subsidy Scheme (FSS):

  • The FSS (2013) replaced the Transport Subsidy Scheme, 1971.
  • It was in operation in all 8 North Eastern States, Himachal Pradesh, Uttarakhand, J&K, Darjeeling District of West Bengal, Andaman & Nicobar Islands and Lakshadweep islands.
  • The FSS has been discontinued since 22.11.2016. But, the industrial units under these schemes during their currency are eligible for the benefits of the scheme.

While the inland transport incentive is available for certain landlocked states, there is no proposal to provide the same to the state of Chhattisgarh.


About Transport Subsidy Scheme –

Government of India had introduced Transport Subsidy Scheme (TSS) on 23.7.1971 to develop industrialization in the remote, hilly and inaccessible areas.

Scheme Objectives:

The objective is to develop industrialization in the remote, hilly and inaccessible areas in 8 North Eastern Region.

Implementing Agency:

DIPP (Department of Industrial Policy and Promotion) is the implementing agency of TSS/FSS.

Monitoring and Review Mechanism:

In order to check any misuse, Directorates of Industries in each beneficiary State/UT are required to:

  • Carry out periodical checks to ensure that the raw materials/finished goods for which transport subsidy is given in actually used for the intended purpose,
  • To draw up procedures and arrangements for scrutinizing the claims and for promote payment of the claims,
  • To lay down a system of pre-registration and to fix and indicate the capacity of the units during registration,
  • To lay down procedure to ensure regular inflow of information regarding the movement of raw material and finished goods,
  • To lay down that statistics of production and utilization or raw material should be maintained and kept open for inspection.

Source: PIB