This paper presents an improved directional relaying scheme for thyristor-controlled series capacitor (TCSC) compensated transmission line, which is based on the initial slope of the Fault Component Energy (FCE). The initial change in FCE is negative for forward faults and it is positive for reverse faults. The performance of the scheme is tested using PSCAD/EMTDC simulations and algorithm implemented in MATLAB. It is found that proposed scheme is unaffected by voltage and current inversion phenomena, which may occur in the presence of TCSC. Further, the proposed scheme is found accurate for high resistance faults.