Shimla: Lack of a rail network in the state has compelled the central government to extend the freight subsidy for industry by another nine years, senior government officials stated on Monday.
Subhash Negi, principal secretary industries told My Himachal News, the central government has informed about extending the freight subsidy period to 2017.
To keep production processes competitive in rural and backward areas, freight subsidy of as much as 75 percent is provided on road transport of raw materials and finished goods for the distance between the nearest rail head and the industrial unit, said Negi.
Earlier it used to be extended on a year to year basis, but the central government has recently communicated that it is being extended for nine years. Chief Minister Prem Kumar Dhumal had taken up the issue with the central government, he said.
Ashok Tandon of Chamber of Indian Industries (CII) said that the freight subsidy “was a need for industry in these areas.
“Without a rail network, manufacturing in the state is rendered non-competitive because of higher transport costs involved in movement of both raw material and finished products,” he said.
Hopefully in a nine year period Baddi would be connected by rail and so would the Bhanupali-Bilaspur rail line be laid out, which would benefit industry, added Tandon.
Freight subsidy is a scheme that predates the industrial incentives provided for Jammu & Kashmir, Uttrakhand, Himachal and the North Eastern states after November 2003 and is given for a five year period to any new unit that comes into production so as to compensate the locational disadvantage.