Solution:

What is Transport Subsidy?

• The transport subsidy scheme, 1971 envisages the grant of a transport subsidy to industrial units in selected areas to the extent of 50% of the transport cost of raw materials which are brought into and finished goods which are taken out of the selected areas.

• The scheme covers the State of Jammu and Kashmir, Himachal Pradesh, hilly areas of Uttar Pradesh and North Eastern Region comprising of States of Assam, Meghalaya, Nagaland, Tripura, and the Union Territories of Arunachal Pradesh, Andaman and Nicobar Islands, Mizoram, and Lakshadweep.

• The subsidy is paid on transport costs between the selected railheads and the location of the industrial units in the above states/Union Territories.

The highlights of the scheme are:

1. Industrial units in the above-mentioned areas will be given transport subsidy in respect of the raw materials brought into and the finished goods which are taken out of such areas.

2. No transport subsidy will be allowed for the internal movement of raw, materials and finished goods within the State of Jammu and Kashmir and the North Eastern Region.

3. In the case of Jammu and Kashmir, the transport subsidy will be given between the railhead at Pathankot and the location of the industrial unit or between the location of the industrial unit and Jammu, whichever is nearer.

4. Barring Jammu and Kashmir, the transport subsidy will be given on the transport cost between Siliguri and the location of the industrial unit in the North Eastern States.

   • While calculating the transport cost, the cost from Siliguri to the railway station nearest to the industrial unit will be taken into account in respect of raw materials and finished goods.

   • If any other mode of transport is used the cost will be limited to the the amount which the industrial unit may have paid, if it had used the above mode of transport.

5. Freight charges for the movement of goods by road will be determined based on the transport rates fixed by the government of a State/ Union Territory from time to time, or the actual freight paid, whichever is less.

6. The cost of loading or unloading and other handling charges will be taken into account to determine transport costs.

7. All new industrial units located in the selected areas will be eligible for a transport subsidy equivalent to 50% of the transport cost of raw materials and finished goods.

8. Existing industrial units are also eligible for a 50% subsidy in respect of additional transport costs of raw materials and finished goods resulting from a substantial expansion or diversification affected by them after the commencement of the Transport Subsidy scheme.

9. The transport subsidy will cover 50% of the transport charges on the movement of steel from the Gauhati Stockyard of Hindustan Steel Limited to the site of an industrial unit in the North-Eastern Region.

10. The Directorates of Industries in the States/Union Territories will lay down system of pre-registration of eligible industrial units for the transport subsidy