Battery stocks surged on Wednesday after the government raised the safe harbour threshold for lithium-ion batteries used in EVs and hybrid vehicles. The limit increased from Rs 200 crore to Rs 300 crore, classifying these batteries as core auto components. This move reduces compliance scrutiny, boosts investment, and strengthens India’s EV sector.
The policy change benefits battery makers by reducing compliance costs, attracting investments, and boosting India’s EV ecosystem. Lithium-ion batteries are now classified as ‘core auto components,’ allowing importers to declare transfer prices with less scrutiny. This move simplifies trade, supports industry growth, and strengthens the supply chain for electric and hybrid vehicles.
When companies trade across borders, they set transfer prices for goods sold between their subsidiaries. Tax authorities monitor these prices to prevent profit shifting to low-tax countries, ensuring fair taxation. This regulation helps maintain transparency and prevents companies from reducing tax liabilities through artificial pricing in cross-border transactions.
The CBDT’s safe harbour expansion means companies declaring transfer prices within the set range won’t face tax scrutiny. This removes regulatory hurdles, making EV battery imports smoother. By reducing compliance risks, the move encourages investment in lithium-ion battery production, benefiting companies and strengthening India’s EV ecosystem.
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Here are the stocks that will benefit from lithium-ion batteries, included as ‘core auto components’:
1. Amara Raja Energy & Mobility Ltd
Amara Raja Energy & Mobility Limited, formerly known as Amara Raja Batteries Limited, is an Indian storage battery company that produces lead-acid batteries for industrial and automotive uses. The company manufactures car batteries, residential uninterruptible power supplies, and other products. With a market capitalization of Rs 19,457.43 crore, the shares were trading at Rs 1,068 per share, increasing around 1.32 percent as compared to the previous closing price.
Amara Raja Energy & Mobility focuses on sustainability by reducing resource use, extending battery life, and ensuring easy recycling. It is setting up a 16 GWh lithium cell and 5 GWh pack assembly facility, along with an E-hub (AR-ACT) for R&D in new energy solutions.
2. Exide Industries Ltd
Exide Industries Limited is an India-based firm that designs, produces, promotes, and sells lead-acid storage batteries. The company’s segments are Storage Batteries & Allied Products and Life Insurance. With a market capitalization of Rs 31,021 crore, the shares were trading at Rs 365 per share, increasing around 1.32 percent as compared to the previous closing price.
The company plans to invest ₹5,000 crores in lithium-ion cell manufacturing, with ₹2,000 crores already invested. It is confident in financing the project through internal accruals, while also considering bridge loans to address cash flow requirements during project implementation.
Written by Abhishek Singh
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