The Indian arm of US-based diversified technology and manufacturing conglomerate Honeywell has sought export sops for turbochargers manufactured by the company in its plants in Pune, as it claims that it is an automobile component that are eligible for incentives.

The Directorate-General of Foreign Trade (DGFT), under the Commerce Ministry, had excluded turbochargers from the list of auto-components that qualified for 3 per cent export incentives under the foreign trade policy announced earlier this year.

“The Commerce Secretary has set up an internal committee to examine problems flowing from the implementation of the FTP, which will also examine Honeywell’s demand,” a Government official told BusinessLine .

Honeywell opened its plant in Pune in 2005 to manufacture turbochargers — equipment that amplifies engine power — and now has a full-fledged modern production facility there. The Pune unit provides turbos for India, and also serves as an export hub for Southeast Asia and Europe.

In its representation to the Department of Industrial Policy & Promotion (DIPP), Honeywell has argued that since its turbochargers are used in cars to increase efficiency, it should be treated as an automobile part and be eligible for export incentives under the Merchandise Export Incentive Scheme (MEIS) announced by the government early this year.

Under the scheme exports of identified products to specific market are eligible for scrips ranging between 2 per cent and 5 per cent of the export value, which could be used to pay various taxes including customs and service or sold to other users. Automobile parts are eligible for a three per cent incentive scrip.

According to the DGFT, turbochargers do not technically qualify as automobile part. One of the reasons is that they just add to the efficiency of the engine.

Panel to meet soon “The internal committee will meet soon and examine both sides of the argument. If it feels that Honeywell’s arguments are valid, its turbochargers will get incentives that go to other auto parts,” the official said.

The DGFT has to keep in mind the budget approved by the Finance Ministry while preparing the list of items that qualify for export sops.

Honeywell India has more than $1 billion in domestic sales and exports from the country in the three areas of aerospace, automation and control solutions, and performance materials.

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