Honeywell Says Committed to India

By RUMMAN AHMED and C. R. JAYACHANDRAN

BANGALORE — Honeywell International Inc. said Thursday it is committed to India as one of its manufacturing as well as research and development hub despite Washington’s plans to change tax rules related to U.S. companies’ overseas operations.

“We are committed to India as a manufacturing location, export hub and most importantly, as a center of engineering and R&D excellence,” Chairman and Chief Executive Dave Cote said on the inauguration of Honeywell’s second research and development center in India’s technology hub, Bangalore.

“I get extremely worried when I hear any kind of discussions about protectionism,” Mr. Cote said, referring to U.S. President Barack Obama’s tax proposals.

“I don’t know what the shape of this will be in the end. Anything that creates any kind of protectionism, anything that stops the globalization activity, will be harmful.”

Mr. Obama vowed Monday to push forward with his plan to curb some overseas tax advantages enjoyed by multinationals under the U.S. tax code. “It’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York,” Mr. Obama said.

While the U.S. plans to tax profits of American companies no matter where they are earned, most other developed countries only tax the activity that occurs within their borders.

The U.S.-based maker of jet engines and home-security products has invested $50 million to establish the new Indian facility, which will accommodate 3,000 people.

Honeywell now has five manufacturing facilities in India. The company’s first research and development center is also located in Bangalore.

“Our presence here has grown from 1,000 employees in 2002 to 10,000 today,” Mr. Cote said.

Honeywell had in February said it expects annual revenue from India to almost double to $1 billion in three years.

Asked whether the global economic slowdown will hamper its business prospects in India, Cote said, “I will not back off on our possibility of our being there (to post $1 billion revenue)…but who knows how things will go.”

He said the company is aggressively pursuing a potential contract in India to supply fighter-jet engines.

A company executive had said earlier this year it expects India to invite bids for replacing the engines of 125 Jaguar jets in the second quarter of the current year.

India’s deal will likely be for 280 engines, including spare engines, for the twin-engine Jaguar combat jet. It is likely to be finalized by the fourth quarter of 2010.