Last updated: December 17th, 2019 5:03 PM

Transport Subsidy Scheme

The Government of India has initiated the Transport Subsidy Scheme to promote industrialization in the remote, hilly and inaccessible areas. Under this scheme, the Government grants subsidy for the transportation expenditure incurred by the industrial units through which they could stand competition with other similar industries, which are geographically located in better areas. This scheme is governed by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry. Let us look in detail about the Transport Subsidy Scheme in this article. To know about the scheme of Transport and Marketing Assistance (TMA)

Eligibility Criteria

The Scheme applies to all industrial units (that includes barring plantations, refineries and power generating units both in private and public sectors irrespective of the size of their unit).  Note: The industrial units will not be eligible for the transport subsidy scheme for the internal flow of raw materials and finished goods within the State of Jammu & Kashmir, State of Himachal Pradesh, the hilly areas of Uttar Pradesh, the Union Territory of Andaman & Nicobar Islands and Lakshadweep and the State of Sikkim. 

Documents Required 

The below listed are the required documents to be enclosed while applying for the Transport Subsidy Scheme.

• Unit documentations
• Period of claim
• Date of receipt of the claim 
• Physical verification report of DI&CC
• Statement of raw material purchased
• Statement with the details of the utilization of raw material and finished products manufactured during the claim period
• Statement of finished goods moved to places outside NER or within NER during the claim period
• VAT clearance certificate for the relevant period 
• VAT payment challan/VAT return
• Affidavit as per the prescribed format that the industrial unit has not claimed subsidy from any other source
• Balance sheet for the relevant period with details of carriage inward and outward 
• Power bills and copy of payment for the relevant period 
• CA certificate in respect of Raw material and Finished Goods for the relevant period
• NOC from the Pollution Control Board for the specific period 
• Bills and challans for raw material and Finished goods for the specific period
• Receipt from the transporters for carrying of goods (raw/material/finished products) for the relevant period
• Bills and challan consignment note for the finished goods dispatched 

In the case of excisable goods manufactured by the unit, then the following certificates to be furnished:

• Certificate issued from the Excise Department showing the quantity cleared on a quarterly basis
• Excise payment challan or Refund statement stating the quantity and value.
• In case of a local sale, a detailed address of purchasers along with the payment slip details (cash/cheque) CA certificate on the body of the statement 
• In case of purchase of Raw Material from outside NER and from within NER; a copy of challan and consignment note of transporter confirmed to purchaser 
• Employment Certificate from the Department of Labour with the Number of employees details

In the case of Flour Mill the below-listed documents are to be enclosed:

• Delivery certificate from the Railway department (if carried by rail)
• Agriculture cess payment challan in the case of raw materials transported by the road
• A quarterly sales tax return that covers the claim period authenticated by the sales tax department showing quantity and value.
• All railway receipt must be in the name of the unit as consignee
• Raw materials brought from the Railway station to factory detailed statement and payment should be made by cheque only.
• Certificate relating to the PDS quota for each quota from appropriate authority.

Coverage Areas

Under this scheme, the transport subsidy will be provided on the movement of raw materials and finished goods to and from designated railheads allowed to the industrial units that are located in the North East Regions (NER) are as follows:

• Jammu & Kashmir
• Himachal Pradesh
• Andaman and Nicobar Islands 
• Lakshadweep
• Selected Districts of Uttarakhand 
• Selected Districts of West Bengal
• Sikkim

Quantum of Subsidy

The Government grants a subsidy ranging between 50% and 90% of the transport cost is provided for the transportation of raw material and finished goods to and from the area of the industrial unit and the designated rail‐head. 

• The subsidy provided for the North East States, J&K and UTs is 90%
• The subsidy provided for the Himachal Pradesh and Uttarkhand and Darjeeling District of West Bengal is 75%
• The subsidy provided for the movement of goods within NER, the subsidy is 50%.

The transport subsidy would also cover the movement of ‘raw materials’ from one State to another within the North Eastern Region (NER). The transport subsidy would also cover the inter-State movement of ‘finished goods’ within the region but the subsidy available would be 50% of the transport cost on the movement of the goods from the location of the units to the nearest Railway Station by road and thereafter by rail and vice-versa. The transport subsidy would also cover 75% of the air freight on the movement of electronic products by air to and up to the location of the industrial unit and vice-versa. In case of movement of finished goods moving partly by air and partly by rail or road, the transport subsidy would be applicable @ 75% on air freight from the Calcutta up to the airport nearby to the location of the industrial unit and thereafter, @90% for the movement by rail or road up to the location of the unit and vice versa.

Period of Eligibility

The subsidy provided to a unit is eligible for a maximum time period of 5 years from the date of commencement of the commercial production.

Nodal Agency

The payment of subsidy to the eligible industrial units in the States is made through the nodal agencies appointed for the purpose. They are given as follows:

• North East Development Financial Corporation (NEDFi) for North Eastern Region
• J&K Development Finance Corporation Limited (JKDFC) for Jammu & Kashmir
• Himachal Pradesh State Industrial Development Corporation Limited (HPSIDC) for Himachal Pradesh
• State Infrastructure & Industrial Development Corporation of Uttarakhand Limited (SIDCUL) for Uttarakhand
• The disbursement of subsidy amount to the industrial units in the Union Territories (UTs) is made through the UTs Administrations.

Release of Funds

The Government of India has released Rs.2438.99 crores (approximately) to the States/UTs under this Transport Subsidy Scheme.

Scrutinization of Claims

The Committee will operate at the State/UT Level and scrutinize and settle all claims of transport subsidy arising in the State/UT. The claimants must be asked to provide proof of raw materials, ‘imported’ into and finished goods ‘exported’ out of the selected States/UT/areas where the unit is situated from the registered chartered accountants. The committee would also lay down the production of any other records/statements which in their opinion is necessary to determine the eligibility of claimant for the transport subsidy. In the case of small units with a capital investment of Rs.1 lakh and less the requirement of production of a certificate from CA would be waived subject to the condition that such claims are well verified by the Government authorities before the subsidy is approved/disbursed. The application of Transport Subsidy Scheme can be downloaded online and the same has been enclosed below for the ready reference: After having scrutinized and settled the claims, the amount disbursed to industrial unit should first be adjusted against the outstanding ways and means of advance made to the State Government/UT administration for the Centrally Sponsored Scheme in accordance with the procedure outlined in the Ministry of Finance, if any, would be paid in cash to the State Governments/UT Administration. In the case of small units with the capital investment of Rs.1 lakh and less, the requirement of the production of proof of import of raw material and export of finished goods from the registered CA will be substituted by an appropriate verification by the State Government authorities.