Battery makers Amara Raja and Exide Industries shares rose 5 and 4 per cent respectively on the 26th after the central government expanded the safe harbour limit to include lithium-ion batteries used in electric or hybrid electric vehicles as a ‘core auto component’, raising the limit to Rs 300 crore from the current Rs 200 crore.
The move is expected to benefit battery manufacturers in reducing compliance risks, encouraging investments and strengthening India’s electric vehicle (EV) ecosystem. Lithium-ion batteries are now classified as a ‘core auto component’ under the rule, which means companies importing them can now accept their declared transfer price without any stringent scrutiny.
When companies trade across borders, they can buy and sell goods between their subsidiaries, and the price at which these transactions take place is called the transfer price. Tax authorities keep a close watch on these prices to ensure that companies do not manipulate them to shift profits to low-tax countries.
The CBDT’s safe harbour extension means that as long as companies declare transfer prices within the prescribed limits, tax authorities will accept them without question. This removes a significant regulatory overhang and ensures a seamless import process for EV battery components.
At around 10:40 am, the company’s shares were trading at Rs 1,080, up 2 percent from its previous close, on the NSE. On the other hand, shares of Exide Industries were trading at Rs 365, up over a percent from its previous close. Shares of Amara Raja and Exide have fallen 10 and 12 percent respectively since the beginning of the year.
