The shares of battery manufacturers Amara Raja and Exide Industries increased 5% and 4%, respectively, on Wednesday, 26 March, after the Center increased the safe harbour threshold to Rs 300 crore from the current Rs 200 crore to include lithium-ion batteries used in electric or hybrid electric vehicles as “core auto components.”

It is expected that the action will benefit battery producers by protecting India’s electric vehicle (EV) ecosystem, encouraging investment, and lowering compliance risks. Due to the rule’s new classification of lithium-ion batteries as “core auto components,” importers can now have their declared transfer prices accepted with minimal investigation.

When conducting cross-border business, companies may buy and sell goods between their subsidiaries; the term “transfer price” refers to the price at which these transactions occur.  Businesses are closely monitored by tax authorities to ensure they are not manipulating these prices to shift earnings to countries with lower taxes.

As long as businesses declare transfer prices within the permitted range, tax authorities will accept them without any problems, according to the safe harbour expansion of the CBDT. This ensures a smoother import process for EV battery parts and removes a major regulatory obstacle.

At 2:20 pm, the shares of Amara Raja were trading 0.31% higher at Rs 1,058.70, and Exide Industries were trading % higher at 0.42% higher at Rs 361.70 on NSE. 

Amara Raja Insights? Let the Analyst Guide You.

Tired of guessing stocks to trade in daily?
Unicorn Signals empowers you with powerful tools like daily stock scans for Intraday, Swing & Investing, Market Predictions and much more. Download the Unicorn Signals app today and take control of your investments!