Automotive Sector of Romania and India

Embassy of India,Bucharest, Embassyof Romania India Romania Automotive Sectors Automotive –Romania Market Analysis Market 1

2017 © The Smart Cube. All Rights Reserved. Ambassador Dr the The comments investing Union engagement from important through countries manufacturers country Dear scope automotive is automotive manufacturers tractors world countries Maruti, Nissan in innovation as India AVS modest the a ideal Embassy destination Friends, India from . Ramesh across for The Given With It India’s country and . Hero, this and gives platform in this – identify on – automotive embassy and Hyundai 1 all the and sectors Romania sector report st between all ranging its automotive auto has level this Bajaj best Chandra at July me of (OEMs) R&D top segments provide strong by affordable recently initiative vehicles partners to of components wishes, is immense accounting of 2017 . and five of over facilities, These trade to to take between India entities India manufacturing located manufacturing Ashok highlight being avail a will industry – a forward launched of to and are fillip passenger and for dozen costs will of pleasure ours substantially also in US, of Leyland $ for in . mutual Romania. the automotive in 550 view to both the Some . be addition . Germany, is The this have international $54 India its market the happy and very strengths of and . countries . hub effort uniform to 5 ‘Make tradition, India benefit of India a the are million $600 The robust bring commercial increase, positive to the in here to Turkey, components . large - also Ford, the We Romania bilateral in Europe, facilitate of major million – Goods in companies out and and in Indian this India’ Romania will suppliers Romania pool this impact Email: Email: BMW, including UK - 2016 this the sector Fax: (40 one deeply Tel:- (40 international vehicles, and trade important with of in Business and initiative in brands larger located 17. market technical the [email protected] Caterpillar, of any on Services components to is Italy for and a between appreciate in the 46, Boulevard46, Aviatorilor - There similarly past the sources 21) 211 06 14/211 87 211 06 14/21115 21) 54 619 02 36/21155 21) number way Dr AVSDr Ramesh Chandra two such the setting market . help ; Forum, India fastest and here survey and auto Bucharest, Romania automotive manpower few and Tax to original exists as companies our - high Embassy Indiaof Daimler, . has its realize India up emerging in TATA, of implemented three years, Our industry which to your growing report two the requirements international been their an Ambassador value a equipment endeavour to number Mahindra, views wheelers, European July 2017 July a countries immense available could with Sector 1 Renault, sector explore greater in design, chosen sector of of in as both and the the the the be an . of in . 2

2017 © The Smart Cube. All Rights Reserved. Table of Contents of Table . India . Romania ...... Political Political Appendix Regulatory Investing Trade Automotive Automotive Appendix Regulatory Investing Trade Automotive Automotive Agreements Agreements and and in in Framework Framework India Romania Market Sector Market Sector Economic Economic Overview Overview Scenario Scenario Overview Overview 130 126 123 118 95 84 74 68 63 57 52 28 19 5 3

2017 © The Smart Cube. All Rights Reserved. Worldwide Governance Indicators (WGI) 2015 Qualityand Decline in CorruptionLevels RegisteredRomaniaProgress in Governance Country Turkey India Romania Hungary Slovakia Spain Poland Republic Czech France Germany Country Higher India Turkey Romania Hungary Slovakia Republic Czech Spain Poland France Germany Romania’s Romania Introduction 2016 Corruption Perceptions Index (lower position indicates higher level corruption) of indicates higher position Perceptions (lower Index Corruption 2016 Political Stability Easeand Business of Doing WGI ranks WGIs, Chamber of Deputies of Chamber the and Senate the comprises which parliament, bicameral a has and republic democraticpresidential Romaniasemi is a Political Regime score close except Accountability indicates to Voice and Voice Hungary for 35 61 62 66 75 79 80 78 86 96 Global Ranking regulatory higher - but 79 75 57 57 54 47 41 29 23 10 lags Violence/Terrorism governance quality Political Stability Stability Political and Absence of of Absence and behind – 10 17 55 70 80 57 76 81 57 70 which Western Head of State minister prime the appointing and policies, defence and foreign overseeing responsibilities include his and term, 5-year a for elected is President The quality posted Index Value Index Europe 40 41 48 48 51 55 58 62 69 81 a Effectiveness Government Government slightly ; during 63 56 52 71 75 85 75 82 89 94 weaker 2010– performance 2015 Regulatory Regulatory Political and Political and Economic Overview Quality of Romania positions compared Index countries progress country in , 64 40 72 74 75 75 80 81 84 93 the the public World Regional Organisation county status county a with municipality separatelyas a administered is that Bucharest of city the including not counties, 41 comprises Romania in Corruption since ; during displays Source: Transparency International Source: Transparency 1997 has Rule of of Rule with Bank Law sector 55 56 61 67 70 78 76 83 88 93 however, its , other upgraded 2013– made and first Source: The World Bank Source: World The a Perceptions corruption Corruption high Control of of Control European 2016 inclusion rose visible 55 44 58 61 62 69 71 67 88 93 most level the 12 of 6

2017 © The Smart Cube. All Rights Reserved. Business Ratings Global Peaceon RanksHighand Doing Romania Country Country Country Turkey India India France France Poland Spain Slovakia Romania Spain Germany Hungary Turkey Czech Republic Slovakia Hungary Poland Romania Czech Republic Germany Spain France Czech Republic Poland Germany India Turkey Hungary Romania Slovakia 2017 Index2017of Economic Freedom (lowerpoorerhighlightsposition economic freedom) state poorer of peace) outlines position Peace Index (lower Global 2017 Doing Business 2017 Ranking (lower position indicates poorer ease of doing business) indicates ease poorer of doing position (lower Ranking 2017 Business Doing Global Ranking Global Global Ranking Global Ranking Global 146 137 143 130 51 72 33 69 26 60 25 23 16 15 57 56 45 39 28 26 69 41 36 33 32 29 27 24 17 6 Spain Romania Romania vehicle are access terms Index Value Index Value developed 2.541 1.600 2.777 1.839 1.676 1.611 1.568 1.500 1.494 1.360 52.6 69.7 63.3 63.6 65.2 65.7 65.8 68.3 73.3 73.8 on to of manufacturing loans ease ranks scores trading of economies close doing particularly across registered account in upwards Romania’s Despite regulatory score free Romania 2016 fewer the different and fight the and progress system religious ethnic, high long may countries business to Political and Political and Economic Overview country, - higher unpredictable government term borders 2017 and country threat France against on protests negatively and in 5 significant socio 2 is well linguistic rule globally development groups efficiency positions – of property acceptance in major Source: Institute for Economics & Peace & Economics for Institute Source: rank a of which both mainly and and a due - of moderately corruption economic, vs terms corruption in Source: The Heritage Foundation Heritage The Source: progress relatively integrity, . law moved to within 2015 judicial led Y affect rights Y - and o- - and low on o- Source: The World Bank Source: World The to of of – Y Y 7

2017 © The Smart Cube. All Rights Reserved. Note: largest Sharein Overall FDI MeansTransport of ManufacturingHolds Fifth Country France Cyprus Germany Austria The Netherlands Italy . . . . FDI Stock FDI PolicyFDI trade, constructionreal estate, & and energyutilities) & andsecond the 2) adjustments any without year, certain a over FDI 1) inflow Represents 4) at 1 EUR are = USD conversions 3) currency All assets fixed tangible of prices rate and in the exchange come changes from can evaluations re from Transport Segment Segment Transport Annual FDI Net Flow Net FDI Annual Meanstransport of manufacturing holdsfifth- the $ low Growth ( In Over During allocated driven ― Refers to the cumulative value of FDI, which is calculated by adding to the opening FDI stock the FDI net flow and the posit and FDI stockthe FDI flow net the opening to adding by calculated is FDI, which of value the cumulativeto Refers More details on the country’s regions are presented in in the Appendix presented are the on regions country’s details More 9 588. 2,999.5 %), the Examples Aerotec 2013 9.2% - - evaluations, from the changed accounting treatment of the opening stocks and from data corrections in the previous stati stocksfrom the previous correctionsin data treatment and theof opening accounting from the changed evaluations, FDI Net Flow Net FDI wage 4 2009– and timeframe, by 2013– million, – in Top (2015) Countries Contributing to West investments and (an overall 2015 of the 2015 Airbus low renowned 2,677.7 as and 17.0% construction 2014 CAGR: CAGR: , 13.0% ($ million, %, 2013– million, %, ($ FDI 3 - automotive % Share of Means of Transport Means of Share of % FDI Bucharest , production- and Share of Means of of Means of and Share West FDI subsidiary) % of Total% FDI net stock in net 12.4 14.2 25.0 - the manufacturers flow 5.2 6.7 6.7 Muntenia flow - registered 3,827.9 Ilfov & utilities 15.4% 1.106 2015 financial intermediation and insurance) and intermediation financial manufacturers is and cost real expected towards accounted Bosch 2015) destination 2 estate Source: National Bank of Romania of Bank Source: National ( and 7 – steady that 8 % the commerce to segment each) already for largest share in FDI stock (after financial intermediation, continue expanded 2009 4.7% means FDI Stock FDI annual to million stock India

a 55,283.3 a steady country operate is contribution, segments, of 2010 4.9% FDI Stock FDI growth as in 2,3 not operations transport

Romania 58,160.1 Romania and Share of Means of Transport Segment Transport of Means of and Share ~ 60% part providing ($ million, %, 2009– million, %, ($ R&D 2011 5.2% despite of - as of largestshare FDIinflow in net (after 60,984.8 Political and Political and Economic Overview centres segment FDI (as progresses as well in the 2012 5.4% Romania ample it of the stock % Share of Means of Transport Means of Share of % top invested as

2015) 65,394.5 in economic gradual more 30 – R&D Romania 2013 5.7% Source: National Bank of Romania of Bank Source: National 2015) from followed countries 66,314.7 less opportunities than ive/negative adjustments recovery being 2014 crisis, 5.4% than stical reports; re reports; stical are doubled by 66,580.2 by a Siemens, Centre $ simple largely 110 in FDI 2015 5.9% FDI - to

- 71,264.2 4 8

2017 © The Smart Cube. All Rights Reserved. Rose over 2009–2016 ShareIndustryof Automotive in Romania’s GDP . . Automotive as Strategic Industry in Romania Strategic as in Automotive Industry evolution of this industryevolutionthisof supportedto has be Romanianby the government becausehas hada it industriesthathas Romanian leveraged the intelligence through andcreativityR&D centres that strong evolutionlately and canpotential maximise its to transform Romaniainto regional a pole “The automotive industry Romania’sis “The vectormain for industrialization;first is also ofthe one it automotive contribution in During The investments, 2009 6% the are the are promotors of keytrends in the European and global automotive industry. […] The government of excellence inautomotive.” country, 2009 Automotive Industry Industry Automotive components to new – 2016 the and focusses foreign country’s Environment, Trade Entrepreneurshipand (May 2017) , growing the 2013 11% companies industry’s strategically demand GDP – Estimated Contribution to Romania’sto (2009– EstimatedGDP Contribution and – AlexandruPetrescu, Minister Business Romanian of entering for share exports on both the in the finished automotive GDP market 2014 12% increased, products and industry, establishing (particularly Political and Political and Economic Overview largely given manufacturing supported the Dacia latter’s 2016 2016) 13% vehicles) by significant facilities higher and 9

2017 © The Smart Cube. All Rights Reserved. Note: Automotive Firms Automotive LargestFirst2 ExportersAre Romania in . . Automotive as Strategic Industry in Romania Strategic as in Automotive Industry 2) engines, engine components and purpose vehicles (e.g., (e.g., vehicles purpose tow cranes trucks), and vehicles, componen firefighter vehicle with bodies, chassis vehicles engines, 1) Over to During ― ― ― ― Figures for 2015 may be revised 2015 be for may Figures Comprises the following subcategories: Passenger vehicles (including those those for >10 racefreig and (including vehicles), passengers vehicles Passenger subcategories: the Comprises following 4,908.2 12.1% 2009 for by Automobile well mainly Share Share Further, In 16. 2016 2009– a 4 more as %, rising 2009 of of due Dacia’s , mainly Dacia the the high in Automotive Exports Automotive 2016 – number 6,174.6 to 12.5% 2016 dominating 2010 2015 vehicle passenger - Romania’s Automotive lower end Automobile reshuffle , powered automotive , , share products, of 8 external components of OEMs the car of 7,602.2 12.1% of the 2011 by was Logan market segment the including establishing strong demand exports 10 Exports ($ million, %, 2009– %, million, ($ Exports the Source:National Institute Romanian of Statistics automotive MCV segment largest largest performance in 7,640.8 infotainment for consisted 13.2% production 2012 1 % Share of Total Exports Total of Share % automotive Exports Exports offices Ford’s exporters domestic in industry automotive B in mainly - – to Max 10,084.0 Romania in systems by ValueShare and Overallof exporter, 15.3% exports its 2013 overall the in model plant of Romania’s exports vehicle vehicle and and gradually 2016) were in followed and Morocco 10,522.9 complex higher 15.1% 2014 rose components Dacia’s 2 automotive components Political and Political and Economic Overview overall diminished by from demand electronics Honeywell Logan 45 exports 9,384.5 15.5% . 2015 3 segment companies, and for % and from ht vehicles, special vehicles, ht to components ts, Sandero rose 68 passenger petrol and diesel diesel and petrol 48 . 2 . 6 % 10,417.7 from % 16.4% , with 2016 models, supported to - – 31 12 cars Dacia likely . . 5 1 % as % , 10

2017 © The Smart Cube. All Rights Reserved. Note: Government FinancialGovernment Aids Firms AccountAutomotive for Lion’s Share in No. Romania region reimbursable initiatives TopState of Beneficiaries Aids Romania’s StatePolicy Aid 10 1 2 3 4 5 6 7 8 9 2) 1) Intensity Automotive Manufacturers Automotive The not resentstable and as by received parentaids a companiesby subsidiaries whole 1.106 1 =USD EUR at are conversions currency All Low Medium High Pirelli Tyres Romania Tyres Pirelli Star Renault Technologie Romania Technologie Renault Lufkin Industries Romania Industries Lufkin Delphi Renault Mecanique Romania Mecanique Renault Aaylex Robert Bosch Robert GST Safety TextilesSafety GST Glasscorp encourages Assembly (State Diesel Systems Diesel Prod grants Company Aid StateCosts Covered) Aid Intensity Eligible of (% West from Scheme 35% investments the GD Northwest state 1,2 Southwest 50% 2014 – from 50% Cumulative Valuemillion, ($ 2005 budget, Aid Value / 70.0 41.4 31.1 31.0 27.4 27.1 24.9 22.9 20.5 19.3 807 both Source: InvestRomania Source: Centre and capped 50% domestic State Bucharest South 50% . . 15% by automotive During production significant Over 50 form Manufacturing accounted aids Aid the % and Northeast of of granted 2005 Scheme limit 50% non their foreign automotive of 8 2005 Southeast Ilfov 35% – of increase for facilities 2015 - of manufacturers reimbursable 50% initial the – ( maximum state GD the categories 2015 36 Political and Political and Economic Overview , – companies – % the top by Region 2015) 2014 largest ), established , investments in Source: Romanian Ministry of Public Finances Public of Ministry Romanian Source: firms government followed 10 the the funding / 332 with funds intensity beneficiaries share various number automotive through ), a in which ; 20% that by of this the state granted the approved of IT are share covered country has 2 entail automotive and total aids state led industry each foreign in Other up non state to per aid the to a - 11

2017 © The Smart Cube. All Rights Reserved. Note: Number of Jobs Created Jobs of Number and Value Investment on Based Differs Aid State Eligible Costs Eligible Aim Payout (differentiated) Companies Criteria for Eligibility schemes) (both Companies Eligibility Budget (differentiated) Investments Criteria for Eligibility both schemes) Investments (for Eligibility Romania’s StatePolicy Aid 2) 1) 1.106 and and 1.106 1 =USD EUR at are conversions currency All For information on non on For information Criteria for Criteria for - eligible sectors, please refer to the Appendix Appendix the to refer please sectors, eligible ...... State ...... Renting facilitiesnew Construction of $11.1 Support enforcementinsolvency or not Are No manufacturingsector)eligible an is intellectual propertyof Acquisition tools and forCAPEX technical installations Are not part years after execution the investmentinitial the of EconomicArea in pastthe 2 Have not shut down asimilar or identical enterprise fromregional state investmentaid for the same in eligible costs project companies: profitabilityNet for existing investment nonofthe - Absence of one in Registered million projected at$110.6 Totalbudget for the ≥$24,657 Equityforcompanies: new company’s company’s Toviable andbe important ecosystem the within localactivities develop economic new In To used be investment region the in development To impact To case case contribute Aid outstanding debt demonstrate million Scheme of largeof companiesin Bucharest , investmentsare registered as costs forcosts existing buildings investmentsminimum of of 2 2015– according to operations operational efficiency for building new facilities or expanding current ones > of of 1 RON 1 = USD USD 0.246 1= RON 0% state and and to regional a statea aid recovery proceeding GD 2023 facilitate extra 2014/807 2 the aid to ‘ enterprises difficultyin schemes is $663.6 million, with annual investmentswith million, $663.6is schemes the general the consolidatedbudget company on positive proceeding for years and do not plan to do so fornext2 the so doyears toplan not do and a the law no. 1990/31 no. law . State . . . . . ; also, not suspended suspended not also,; workerswith disabilities location,including 3 jobs for Creationat of ≥ Equityforcompanies: new companies: profitabilityNet for existing annual salaries benefits + Salary costsconsisting ofgross investment years (for costsSalary company’soperational efficiency Toviable andbe important fora $7,397 eligible sectors Political and Political and Economic Overview Aid ) that) result ’ or areor debtorsnot an in Scheme and haveand benefited not 2 2015– >1% within least 10 jobs per GD 2 consecutive 1 2025 from the required to required (automotive 2014/332 the Europeanthe from activity also 12

2017 © The Smart Cube. All Rights Reserved. Decrease Predictability Decrease FiscalChanges Policy Procedures Simplify but . . VAT Rate VAT Expenses Deductible Policy Dividend Taxpayer Base of Expansion Taxes Number of Profit on Reinvested Tax Exemption Romania’s Fiscal Policy reduce In Typical government VAT 2016, and taxes the employee the changes Romanian and number % contributions contributions have of government dividends provided equipment), as well as IT programmes, is exempt from taxes from isexempt as as well programmes, IT equipment), profit reinvestedthe technicalStartingJanuaryin equipment 2017, (including billing purpose Deductible Reduced Dividends declareand pay corporateRomaniainincome tax Non 40 exceed non fiscal and of number maximum The January VAT 2016 generated taxes - for resident entities whose management is located in Romania are now required to to required now are Romania in located is management whose entities resident 17 Fiscal Code –17 raw 2019 of that to ; the received received conducting expenses 20% however, materials receiver introduced corporate 2 (in rounds are January by (for and economic subject has a despite income agricultural of corporate entities held a ) 2016 – amendments new to Key Modifications a activities a tax minimum and 5 the % Fiscal have purposes) services entity income to - fiscalpaidcompanies by be should taxesto not intention 19 to Code % 10% from tax eliminated by pay (January refer Political and Political and Economic Overview July to stake a in simplify Romanian to for Romania 2017 2017) for all starting increased expenses at ; will least fiscal firm March include drop 1 incurred procedures are year to 2017 predictability, 18% income non ; otherwise, - with taxable, starting the and tax, 13

2017 © The Smart Cube. All Rights Reserved. The supporting stimulate Lowest AcrossLowest Neighbouring Countries Amongst Tax Income Corporate Romania’s . . . Romania’s Fiscal Policy important However, As entities, A corresponds ― country’s . . . 16% Starting period of Eligible directly Romania, Eligibility R&D expenses Overview now, the statutory sophisticated equipment of 9% or 15% starting 1 to Romania’s 10 R&D country’s involved expenses March to 16% on investors : : EU and years Applies Enables the earnings corporate fiscal or 19% apply January 2017 calendar in in R&D CIT transition include countries weighing R&D to stimulus , firms accelerated entities is R&D activities 19% from Tax Rate lower 2017 income Statutory Corporate operations year to depreciation, activities that the , Romania’sFiscal Stimulus R&D that aims from reduce Romania than Hungary (2017) 177% tax 20% opportunities – belong conduct amortisation by Country to that a and (CIT) taxable that low attract has of in overhead to rental is - R&D 21% many cost case create the applicable lowered income both of activities European of and manufacturing neighbouring of settling expenses sellable up 25% domestic non repair its to by on are - CIT 50% resident in Economic an global 33% products Hungary exempt of from amount in Political and Political and Economic Overview countries and R&D destination income the 19% companies foreign from Area assets, vs and first equal . to Romania paying generated are utilisation 9 investments, %; salaries to to ; undertaken Poland Romania Germany Hungary France Spain Slovakia Turkey Republic Czech 50 this income the one % by may fiscal of of year capable Source: Deloitte Source: resident tax R&D staff prove and of in for year a to of 14

2017 © The Smart Cube. All Rights Reserved. Note: CEE EmployerContributionsAre as inSimilar Other Turkey Hungary Czech Poland Slovakia Country Professional Work Salary Guarantee Unemployment Medical Health Social Type Contribution of unemployment,guarantee for salary debts, andwork accidents & professionaldisease funds for leave, to requiredmedical paybe longer contributions no employers will 2018, Starting Turkey,and Slovakia in than Polandconsiderably lower and and Hungary Czechthe Republic, toin Romania are those in similar Currentemployer contributions Employer Contributions by Country (2017) Country by Contributions Employer toState(2017) Romania in Administered Benefits Employee Contributions Employer 1) CEE refersEastern to Europe Central and Republic Security Debts Fund Accidents 1 Leave Countries with Strong Automotive Focus Automotive Strong with Countries Fund Disease Fund and for 0 15. 0 0 0 5 . . . . . 85% 15– 25% 5 2 Unemployment Benefit 8 % % Type Contribution of – Vocational Training 25. 0 Health InsuranceHealth . Social Security Social Security Social Security Social Security Social Security 85% 8 % ( 15. 8 % for normal % of Grossof Salary % work conditions) Political and Political and Economic Overview 25.0%, with certainwith caps 25.0%, certainwith caps 35.0%, certainwith caps 35.2%, 9.0%, with certainwith caps 9.0%, % of Grossof Salary % 20.5% 22.0% 2.0% 1.5% Source: Contabilul.ro Source: Deloitte Source: 15

2017 © The Smart Cube. All Rights Reserved. Gain Access to EuropeanAccessGain to SingleMarket Romania’s EU Membership Helps non- . . . Romania’sRelations International unions/organisations, procedures Romania companies The Organisation Union Romania Schengen across and (UN) market ― ― ― former (as still fulfilling consent New enable Schengen citizens Inclusion security without be without country’s thus Romania’s Membership International in Unions/Organisations the of pending shipped by (EU), potential is November aims Area merchandise EU to avoid border being and establishing a of to necessary gain in member incurred travel (NATO), current Area this EU decrease further to approval the access submitted to custom Nations control United membership body members become to other membership 2016), of requirements, North members other including and when produced a would to World World strengthen numerous its Bank from subsidiary NATO taxes the level to the member Schengen a which border need enable Atlantic selling part the ; European enables United of hence, and the in corruption international would Netherlands expects Romania in Romania of unanimous its Asia control Black SeaBlack Economic Organisation of the the Organisationof Foundation Romanian European screening countries countries products Romania Nations the EU non despite border Cooperation Treaty – single Europe also -EU the EU to is . . . The Black Belgium, which Romania and Georgia, includes Vietnam, Sweden, Federation, Pakistan, Myanmar, Cyprus, ‘de experts Economic become Romania representative Lithuania, Ireland, France, 2016 Monetary Fund Reconstruction and Reconstruction and International European Bank for Bank European facto’ Ukraine country Development , the Sea Germany, across includes Italy, Czech Switzerland, is Brunei, a Greece, decisional Albania, is Luxembourg, country Philippines, the Co the also full is undergoing Singapore, Economic -operation Japan, a Republic, 19 Netherlands, part Political and Political and Economic Overview member member ASEAN Bulgaria, Greece, Moldavia, OECD Australia, is Armenia, power of Kazakhstan, Thailand, represented the Poland, Malaysia, working , Cooperation Denmark, Slovakia, an of Secretariat and Cambodia, Hungary, of Asia the New Russia, evaluation the Austria, EU Firms Azerbaijan, Development – the Europe Organisation Korea, groups Portugal, Zealand, Organisation Malta, by United Slovenia, Estonia, India, Serbia, China, governmental and , Foundation Laos, Bangladesh, which process but Indonesia, Mongolia, Kingdom, Bulgaria, Norway, Finland, Croatia, ; Russian an Turkey has Latvia, of Spain, as also the for EU no to of 16

2017 © The Smart Cube. All Rights Reserved. Note: Second HighestY- 0.0% . Extractive and processing industry, utilities and garbage disposal solutions disposal garbage and utilities industry, processing and Extractive Professional, scientific, technical,administrative supportand activities education health and care, administration, Public & security social transactions estate Real services insurance and Financial Retailtrade, vehiclerepair,transport, hotels and restaurants Outlook billion GDP Analysis GDP 2016 GDP 2016 GDP $187.8 1) Following and gradually All currency conversions are at RON 1 = USD 0.246 and EUR 1 = USD USD 1 = EUR 0.246 USD and 1= RON at are conversions currency All 8.5% 2008 absorption 1 -7.1% . – resumed 2009 a Nominal Prices In lower plunge 2016 . . of 2010 VAT Ireland and As expected Despite growing if , -0.8% EU the growth, Strongest in the GDP Growth – Growth GDP per on funds 2009 register nominal 2011 1.1% government food the ( expected 5 investments . wage caused 7 mainly products IMF, %) - 0.6% 2012 Sector performing Sectors in 2016 Sectors in performing the Source: ‘World Economic Outlook’, IMF 2017)IMF (April Outlook’, Economic ‘World Source: GDP in increases, second o propelled by growth rose Real (Constant) Prices (%, 2008– (%, RealPrices (Constant) 2017 3.5% 2013 continues and - the Y Growthin EuropeY in 2017 6 , rising . Romania’s 8 2014 3.1% highest ripple % during the Y by 1.106 wages) - to o Romanian -Y, higher 2015 3.9% effect focus 2017 Y driven - o GDP and - Y 4.8% 2016 of – on private increase 2022 low is the by – economy stimulating Nominal Growth Nominal projected high 2017F interest 4.2% global driven consumption, across consumption 2018F 3.4% 2022F) financial is rates mainly to consumption likely Macroeconomic Overview Macroeconomic Europe, continue Y- 2019F 3.3% o by to - crisis, Y Nominal Growth Nominal Y stronger (particularly fiscal slow 2020F 3.3% surpassed its 15.3% 23.2% 6.0% 8.8% 9.2% 9.7% Romania’s rather down relaxation positive 2021F investments 3.3% in by than only light 2022F 3.3% trend 2022 GDP and on by of 17

Consumption and TaxWearingConsumptionEffects Cuts Off ExitsDeflationary Phase Driven by Increased

8.6% . . Outlook Inflation Analysis 2016 – 2011

trend European In negative production Despite ― Key Factors Factors Key 2017 deflationary The 6.3% of latest 6.7% , fluctuations delayed inflation values Central and evolution 4.7% Eurozone in Inflation Low in 2013– in Output Agricultural Strong Domestic pressures (driven by According generated wage during corporate 4.4% in Bank Q 1 7.8% Romania due European products) European on Russia’s embargo by (affected Demand Aggregate in Deficit increases, 2019 is 2016 Q in by announced Source: ‘Reports on Inflation’, National Bank of Romania (2008 Romania of Bank National Inflation’, on Source: ‘Reports 2 7.9% mainly by to the to 2015– investments wage due the Brexit unfavourable Euro is Inflation Rate (Q2 2008– Rate (Q2 Inflation 3.5% attributable expected Romania’s National Q to zone) 4 and 2.0% increases), plans 2016 the 5.3% oil due effects to to Bank price national inflation to 5.4% rise, to tighten 1.9% tax products, starting June 2015), from from 2015), June starting products, 20% to 19% (starting January January 2017) to 20% (starting 19% continuous VAT cuts from 24% to 9% (on food food (on 9% to 24% from cuts VAT of uncertainties potential of in starting January 2016) and from from and 2016) January starting cuts Romania, 24% to 20% (the standard rate, rate, standard (the 20% to 24% a line rate currency its lower (specifically Q1 2019F) Q1 1.5% monetary with declined Lower Prices of Imported Drop in Oil & Oil & in Drop Gas deflation external VAT Consumer Goods and and Goods Consumer domestic -1.6% the movements, EU wearing during VAT) policy – 2017) Raw Materials -0.7% across Prices situation demand/supply inflation and Macroeconomic Overview Macroeconomic 2011 and -0.5% off, variation the external thus – – higher 2016 EU in is 0.6% projected March help factors 1.6% and in consumption VAT fluctuations reverse agricultural registered 2017 3.0% (such to , 3.4% rise the Additional Factors the as 18 Q2 2015–Q4 2016

2017 © The Smart Cube. All Rights Reserved. Note: Since 2009 Likely to Continue Continue to Likely 2009 Since Level Workforce in Automotive Growth Sturdy Outlook . . Labour MarketLabour Analysis 2) parts 1) Rise displayed Post countries on ― 115.1 All currency conversions are at EUR 1 = USD 1.106 1 =USD EUR at are conversions currency All trailers, semi chassis, vehicle road vehicles, in manufacturing involved employees Comprises 2008 2.3% crisis By with labour Average Number of Employees Automotivein Industry in a 2011 headcount other staff significant - (e. robust , intensive the . . levels, g No. of Employees in Automotive Industry Automotive in Employees of No. industries 2009 2.1% . 99.6 , professionals and However, components Increasing labour levels industry Western growth was as fall setting activities) of in accounts (e likely 2015 in had certain . Europe) during g higher . focus 107.0 2.4% , 2010 2009 F&B, factory already due up (e. by for fields 2010– , g automatisation Source:National Institute Romanian of Statistics of furniture, facilities to . key the , (thousands, %, 2008– %, (thousands, 90% in rebounded automotive Continental the global Timișoara – 2015 average 120.1 establishment 2011 2.8% of particularly paper, all in manufacturers activities CAGR: CAGR: 4.9% Romania and headcount and manufacturers in metallurgy Group’s 2016) even in 127.2 use 2012 2.9% of (as terms surpassed 2015) % of Total No. of Employees in Romania Employees of No. Total of % is of production $ of 13 and in manufacturing likely to 1 2015) . of 3 and Share in Total in Share and Headcount - the leverage trailers and auto & engine & auto and trailers equipment) on chassis million 134.6 3.0% 2013 the to Romanian expanding facilities pre Automotive Sector Overview drive 2 lower production, -crisis expansion that robots demand (particularly wages automotive 143.9 3.2% were 2014 headcount, production components and spareand components may yet where of vis for reduce to - its à - reach compared focussing vis capacity industry industry 160.6 3.5% 2015 manual electric other staff - pre 20

2017 © The Smart Cube. All Rights Reserved. Note: Headcount Automotive Largest Has Romania Western . . Labour MarketLabour Analysis centres Business personnel cities, to 2) 1) 2015), South The presence ― ― BPI Group is a USa is BPI Group refer to the Appendix please region, each in included counties exact on For more information expand In Key West “The 2015, there in manufacturers Muntenia largely Manager, 23,300 . Timis Transylvania of This region industrial Dacia production is Caras Satu MareSatu - Dacia based HR based managementand consultancy 19,700 Top(2015) Automotive Industry Employees in of by Number Counties Arad already manufacturing Most more However, technical because 6,360 favours - 5,700 Severin 5 Automobile 1 accounts holds BPI Automobile Hunedoara on employees environment, present 7,420 an (Centre), the Group curriculum various capacity, 6 lack locations 3,640 the Dolj ‘over 8,300 Western 2,670 4 Alba Cluj for had Bistrita Source: Romanian National Institute of Statistics; TSC Statistics; of Analysis Institute National Romanian Source: in of largest tradition, 2 14,720 Sibiu - (January 21 are this heating’ in OEMs adequate Banat 14, 8,330 . - Arges which 1 Nasaud 7 27,980 other region region located particularly 229 Arges % share of have (West), Brasov and employees 3 9,136 2016) due total to than is include Prahova motorway 5,400 in in operating leverage with likely to total -establishedwell 8 number as Bucharest the lack Continental, multiple 1 well ( 8 automotive to auto . infrastructure 9 proximity of % facilities as generate 2 of qualified of components Pitesti automotive total universities (which Autoliv, automotive to in national headcount and Hungary growing production Timis determines has HELLA, Ploiesti segment, and employees, figure) no and Automotive Sector Overview and clusters across demand industry high Bosch Arad area its staff manufacturers motorway is schools . and with . ” Romania announcing However, mainly 8. Bucharest 8. Centre 7. Northwest 6. West 5. Oltenia Southwest 4. Muntenia 3. South Southeast 2. Northeast 1. Regions Economic Development – focus) for Yazaki Raluca an that production Automotive Automotive network automotive Headcount due - ( – Ilfov in 35 to Parvu, have Low Medium High urban plans large . to focus 3 % the in a 21

2017 © The Smart Cube. All Rights Reserved. Note: National Average National than Higher Typically Wages Automotive 387 Q1 2011 . . Labour MarketLabour Analysis has been closing in recent years recent in closing been has 3) 2) 1) 356 which Fluctuations Over above Wages at Renault Group’s facilities in Turkey are still considered by industry experts to be above those paid to Dacia worke to Dacia paid those to above be experts industry by considered are still Turkey in facilities Group’s at Renault Wages managers,managersgeneral (CEOs) top but excludes middle Includesand All currency conversions are at RON 1 = USD 0.246 and EUR 1 = USD USD 1 = EUR 0.246 USD and 1= RON at are conversions currency All 424 Overall Romania Morocco Country France Q prompt Average Net Monthly Earnings in Automotive Industry Industry Automotive in Average Earnings Monthly Net the Average Net Monthly Earnings (Overall vs. Automotive Industry) Industry) Automotive (Overall vs. Average Earnings Monthly Net 1 361 2011 Q4 2011 443 AverageEarnings Monthly Net national 368 Production Worker Production in Automotive Industry Automotive 425 – manufacturers Q automotive 1 454 2017, Source: ‘Aims SalaryMap SalaryMap ‘Aims Source: average, 381 Q3 2012 Manager Engineer 469 the 396 in average 453 sector to line 2 curb Q2 2013 Wage ($) 401 505 with 1,769.6 ~ ~ – earnings 663.6 331.8 Manufacturing 2014’, Romania Capital Manufacturing Aims Human ($, Q1 2011– Q1 ($, net wages the 413 507 monthly 1 ,3 ,3 236.5 industry’s – to Q1 2014 481 Dacia/Renault Group Example ($, 2016) ($, Example Group Dacia/Renault 1.106 are 407 maintain 518 Q1 2017) Q1 earnings primarily 419 505 642.8 strong 540 margins Q4 2014 in 437 due evolution 517 the – European countries, as countries, as European highlighted by Dacia/Renault Group’sexample Dacia/Renault by remain lower than in developed in lower than developed remain by Designation by Designation Automotive wages in Romania Romania in wages Automotive Source:National Institute Romanian of Statistics to 564 automotive 450 variations Q3 2015 538 Automotive Sector Overview throughout – 571 485 Current Prices sector 537 in 1,550.7 ($, 2014) ($, Q2 2016 vehicle 512 614 rs; however, the gap gap the however, rs; this typically period 1 1 545 619 demand, Q1 2017 stood 565 609 22

2017 © The Smart Cube. All Rights Reserved. Note: Countries with Automotive Focus Automotive with Countries European Key vs. per Employee Cost Lower . . Labour MarketLabour Analysis 2) The Association of Automobile Constructors in Romania comprises 156 automotive vehicle and component manufacturers component 156comprises and Constructorsvehicle automotive Romania in 2) Automobileof Association The 1) Romania (ACAROM), labour costs (ACAROM),Romania the in Westernlabour any in than Romanian other are higher region Romania 20– Between countries hike ― ― ― All currency conversions are at RON 1 = USD 0.246 and EUR 1 = USD USD 1 = EUR 0.246 USD and 1= RON at are conversions currency All As per Constantin Stroe, former President of the Association of Automotive Manufacturers of of Manufacturers Automotiveof the of Association formerPresident Stroe, ConstantinAs per Overall 2 degrees $ In employee The Based starting Average MonthlyCost perEmployee (Overall vs. AutomotiveIndustry) 27% , . 541 300) in May 633 769 2011 largest minimum 2 higher on 8,516.4 in is (RON 2011 with 2016 February 14,378.3 2018 Automotive Industry Automotive still the costs, AverageEmployeeCostper Annual gap , strong 2 and than level considered the , , 200) wage was $ 16,590.3 as 639 2017 2015 minimum well the of in posted automotive . 6 and studies 2019 average (RON as , 828 2012 the 660 higher increasing to in and gross 18,802.3 average 2 have completed, 2013 region, except region, for Ilfov , 640 $ figure staff output; 590 wage ) ( the 27. in . 4 gross skill cost at 2019 3 (RON lowest ($, 2011– ($, rose % the it however, ), shortage payments per is primarily and 2 883 694 19 country 1.106 2013 expected , 400) cost employee % $ – 2015) 738 to Country Comparison ($, ($, 2015) Comparison Country in in the per from $ due . level 2020 0 - 308 the Bucharest 56,407.0 to situation (RON employee to . net further industry 2 in for growth (RON the profit 3 -collar blue , 000 automotive may rise 929 737 2014 1 ) , in and compared 250) Source:National Institute Romanian of Statistics in to training Automotive Sector Overview change 2020 other 1 $ workers 492 and – for bonuses . costs 0 industry to Current Prices due with (RON those $ and 357 2,3 to France Republic Czech Hungary/Slovakia Poland Romania and other to 2 an . with 971 786 5 2015 , was other 000) $ (RON anticipated . 565 European university typically in 1 indirect 8 1 2018 (RON , 450 ) , 23

2017 © The Smart Cube. All Rights Reserved. Automotive Clusters Automotive UnemploymentLow Ratein Romanian . . Labour MarketLabour Analysis Source:National Institute Romanian of Statistics 2008 4.4% Although During lowest specialists agriculture (who Timis 1.1% Czech Republic Czech Caras Unemployment Rate are post Romania Satu MareSatu Hungary Bulgaria Country 2011 2.1% 2.3% Arad Poland - Severin 4.0% the Mehedinti claim Bihor discouraged 2009 3.0% 7.8% and - 9.0% crisis – Hunedoara low 2016 unemployed 5.8% that 5.2% Salaj level 7.3% unemployment Gorj , 9.4% Maramures Dolj 5.1% Alba 2.3% Romania’s Cluj the Unemployment Rate 2010 3.2% 7.0% Bistrita in Valcea 4.9% and 2015 Sibiu 3.4% rate 8.9% Mures Olt – 3.6% 4.6% Unemployment Rate Arges 4.7% - by Key Automotive Cluster and Neighbouring Counties (2016) Counties by KeyNeighbouring Cluster Automotive and citizens Teleorman Nasaud have does Brasov 10.1% Dambovita 3.7% Source:National Institute Romanian of Statistics Harghita unemployment 6.8% 5.8% 2011 5.2% rate Suceava Prahova stopped Covasna 6.1% not who 4.3% 5.1% is 4.8% 5.5% 5.1% 7.6% 4.0% consider Rate partly are – (2008 Buzau 9.3% Ialomita – 7.6% looking past Key Automotive Clusters Key Automotive 2012 Country Comparison (2016) Comparison Country 5.4% due 2016) rate the – the National Average National to number for remained legal the 2013 5.7% a period post job), of - unemployment rate than other other rate than unemployment crisis long in Central and Easternand Central European Romania registered a lowerregistereda Romania of people the 2014 5.4% receiving - Automotive Sector Overview time economic unemployment rates employers likeemployers other typically have lowerhave typically 5 Automotive clusters are Hunedoara and and Hunedoara are average,as various notable exceptions Dolj, which do not do which Dolj, – than the national national the than boast diversity of of diversity boast companies hire a a hire companies large number of of number large working 6 unemployed countries professionals; multinational multinational % counties unemployment band, 2015 5.0% rebound, in reaching subsistence individuals industry 4.8% 2016 aid the 24

2017 © The Smart Cube. All Rights Reserved. Automotive Industry Automotive SignificantShortage of Skills in Romanian . . Skill Shortage Romanian Automotive Industry Skill in produce up to 1,000 graduatesproducewith certifiedto up1,000 competences.” – “Investorswant to comebut not havedo people to - modern hire. In increasingly significant‘talent war’,particularly forhigh- production Continuity Although significant manufacturers professional that more high- that more “It is very important“It isvery for the Romanian government to support the educational system so the Low Investment skill of to training in Specialised in Specialised this employment shortage, from current Training trend qualified professionals are available in the labour market. Today,face we key Main Factors Main Shortage to Leading Skill particularly automotive staff CEO and President, HELLA (September 2015) is likely rate levels German School (May 2016) School German suggests to in clusters push and terms there manufacturers engaging of (especially graduate are with considerable Actual Job Requirements Job Actual and Curriculum School University/Technical Mismatch Between qualified engineers.” in professionals the to DorinSaramet, VP, Kronstadt Brasov educational Higher Earnings Higher with Countries to Employee Relocation adopt Western dayRomania, technical schools unoccupied Automotive Sector Overview measures (e. region) g institutions . , – software Rolf Breidenbach, have such work to engineers) as to resources, cope adapting provide with 25

2017 © The Smart Cube. All Rights Reserved. Educational Institutions Firms Conduct Training in Partnershipwith Skill Shortage Romanian Automotive Industry Skill in may may drive companies to relocate and expansion business Encumbers will still be required engineersprofessionals IT and Automationlimitedas has scope considerable containment Higher Production to to Production Current Level productivity Limit Limit initial (despite investment) and KeyShortage Measuresto Skill Address a better potentially Automation Increase cost Partnerships with with Partnerships Educational Educational Institutions professionals Access Romania lodging as well earnings,ashigher than minimum bound is to provide10% least at wages from Eastern Westernto Romania, afirm costs: High integration/training costs diminished staff and practice) with they combine Higher work to well e.g Automotive Sector Overview from - ., to relocate an employee to., readiness of graduatesof ( readiness - trained theoretical knowledge knowledge theoretical East Relocation Specialist Specialist and and Southeast prepared as as 26

2017 © The Smart Cube. All Rights Reserved. Skill Shortage Skill with Cope to Production Limit/Relocate Firms Skill Shortage Romanian Automotive Industry Skill in PaulPatrascu, HR Senior Manager stafflevel.You than 40 relocate, more livingmay not people but wise, and that is whybelieveI and more businessesmore recalibrate operations to the current solution generated by higher production newor product launches. But it isnot feasible cost toopened a we Ukraine, where new factory. […] To bring people from far away isacrisis “We limited Romanian production to current workforce capacity and moved additional projects Europe.” Romania howtakesproblem itis much to Easternfrom (in Husi travel Romania) to Western Romania, labourwhere cost is half vs. Banat, despite great potential. But the main Romania, Serbia and Hungary. I can tell you nothing is happening in Central- practically has “Timişoara zero unemployment and could leverage workforce from Cocian, GeneralCocian, Manager,Timisoara Elba (May 2016) least have access to labour markets of countries such as Serbia.” work need Septemberhave we been 2015,losing contracts due to lack of personnel. We startedstartedwe in 2014,2013; to automate activities but beginning “In Timişoara, peopleneed thatwe over 20,000cannotwe find. problemThe – – Constantin Stroe, Former ACAROM Former (MayPresident,Stroe, Constantin 2016) longer longer than what it takes to travel from Western counties to Western Romania, Continental Group (March 2015) Group Continental Romania, throughout the years 3 of study.” Continental’sentirepractice in period factories, bymentors guided hired the first generation. Students receivescholarships and spend the Carei and Sibiu. During 2012 studies is supported in Continental’s locations in Timişoara, Brasov, “Dual professional schooling, comprisingtheoretical andpractical - ready resources that we can further train. […] It would ideal be to at – Eastern Europe, Fujikura (March 2016) (MarchEasternFujikura Europe, – 2014, we supportedwe 150students 2014, and – AnicaStoica,Manager – HR – 100 km away from plants.km 100 Automotive Sector Overview – Bogdan Bogdan Eastern - ” – 27

2017 © The Smart Cube. All Rights Reserved. Note: (IAR)launches the first car based on From The Romania; notable examples include include examples notable Romania; Domestic Automotive Market Market Automotive Domestic Producer to Numerous OEMs Numerous to Producer Following wages) numerous Introduction (Dacia)produce to vehicles under Automotive, Takata, Leoni Wiring 1) following manufacturers set up facilities in in facilities up set manufacturers Various global auto componentsVarious global auto Romanian Aeronautic Industries Romanian Industries Aeronautic The timeline highlights key milestones in the automotive industry; the list of companies that opened subsidiaries in Roin subsidiaries that openedthe industry; list companies the automotivein key of milestones highlights The timeline renames it Automobile Craiova it renames Romanian Inception Systems,and HoneywellTRW OEMs strengthenpresence in establishes Dacia AutomobileDacia establishes Daewoo purchases Oltcit and and Oltcit purchasesDaewoo Romania through continuous continuous through Romania The RomanianThe government a 100% Romanian concept 100% a and Continental, HELLA, Dura Dura HELLA, Continental, Citro the global proximity Automotive fall till ë n ’s withdrawal in in withdrawal ’s OEMs Renault licence Today of investments the to established 1 key communist 1991 Industry EU markets facilities – regime 2008 1990 1994 1966 1944 –Present to –2007 in leverage 1989 , 1950s 1908 2008 1999 1976 the low Romanian production – from 1 Vehicle 1 Vehicle from automotive respectively road vehicles and buses, Bucharestproducingstart off Mechanicaland Plant Bus Plant truck,first while Muscel manufactures its Plant Flag Red buses and trucks cars, Romanian of manufacturer establishes MARTA,first the manufacturer) industrial Westinghouse (a US (a Westinghouse company becamesole ownerthe the Daewoo 2010, by Craiova; in stake majority purchases a (Ford) Company Motor Ford Automobile Dacia acquires Renault Citro of the Romanian state and JV a as founded is Craiova in Oltcit costs Automotive MarketAutomotive Scenario ë n (particularly mania is not exhaustive not is mania industry - based in surged terms - as of 29

2017 © The Smart Cube. All Rights Reserved. Note: Components Segment Components by Propelled Mainly Market Automotive . . . . . Romanian Automotive Industry Size Industry Automotive Romanian 1) is visibly improving, while Romania’s minimum wage isstill among the lowest across countries.”EU expanding However, billion Mr to According large are The ~ performance The All currency conversions are at EUR 1 = USD 1.106 1 =USD EUR at are conversions currency All 2005 70% 4.2 . become Slovakia, “We expect the overall automotive industry to grow 5 Stroe Romanian country’s OEMs of by total 2018– also prospects to the an are the from the sales most country’s automotive important stated already 2019 Czech former the important , also that mainly components 2010 Republic, investing 11.4 transport President automotive depend industry the propelled regional overall Hungary in – 12.3 infrastructure 2011 ACAROM (November 2016) ACAROM(November – on the of manufacturing surged by Revenue ACAROM, industry the Romanian country competitors by and the post government’s 14.7 2012 Poland components to hub the 1 Mr Source: Association of Automotive Manufacturers of Romania (ACAROM) Romania of Manufacturers Automotive of Source: Association ($ billion, 2005– ($ billion, leverage automotive segment, . in 2009 Constantin in terms Central 2013 – 18.6 CAGR: CAGR: 13.4% 10% annually.10% Road infrastructure economic continuous low segment which of industry production and attracting Stroe, 2016) typically 19.9 2014 Eastern crisis, Automotive MarketAutomotive Scenario focus Romania would automotive mainly costs accounted Europe on 2015 22.9 likely has modernising driven , the as reach investments for numerous by potential 2016 24.3 a steady strong $ 33 and . 2 30

2017 © The Smart Cube. All Rights Reserved. Note: to Underdeveloped Infrastructure Underdeveloped to Due Manufacturers Vehicle Few Has Romania . . . Number of Active VehicleManufacturers 1) producers on even However, During Dacia ― ― Apart from Dacia and Ford, the vehicle manufacturers category includes small producers of other vehicles, bus including high predictability respectively, TATA Romania Company), 2009 enhancing 29 a and availability fourth 2008 Motors ACAROM Ford also – which 2016 infrastructure large after are and has 2010 of 28 , do the Mercedes second considers due vehicle the a not only low diligence country register - hand number large manufacturer, - Benz that 2011 vehicles 29 on domestic significant lost decided the of Romania 2 country utility 1 limit in Romania (2009– in major to vehicle production in client establish revealed 2012 vehicle light 29 has opportunities demand producers of the and vehicle an figures low necessary underdeveloped bus production 2015) 2013 33 assembly – manufacturers to lower increase Source:National Institute Romanian of Statistics potential quality Automotive MarketAutomotive Scenario plants costs infrastructure 2014 34 the vs in and to (e . Slovakia foreign . g number attract es and truckses and . , continuous Grivita producers and and a 2015 of 37 third low Industrial Hungary, vehicle focus fiscal and and 31

2017 © The Smart Cube. All Rights Reserved. Note: Strong SalesStrongand in Domestic External Markets by Led Dacia’s Turnover Manufacturing Vehicle . . Key Factors Expected to Drive VehicleManufacturing Romaniain VehicleRomania in Manufacturing Brazil, Colombia, Morocco, India, Argentina and Algeria and Argentina India, Morocco, Colombia, Brazil, 2) 1) The Slight Dacia’s ― ― Dacia manufactures components not not but for in components only Dacia plants foralso in its manufactures Renault’s Romania,plant assembly vehicle 1.106 1 =USD EUR at are conversions currency All 2011 materialised $ well Ford Dacia’s starting expensive growth 2017 and 18% starting January 2019 starting January 18% and 2017 VATstarting January reduction19% to disposable income Wage increase leading tohigher Ongoing ScrappageCar Programme 3.9 221 vehicle decline as . registered robust 2 to million turnover was the other manufacturing model, fall in further performance in 2012 2016 investment 4.6 of oversupply a vehicle Internal increased relatively 2017 Duster, driven was manufacturers likely in coming and by significant due segment its 2013 5.8 sales on various Craiova to – resilient prolonged mostly by Revenue of CAGR: CAGR: 11.8% decline grew (e mechanical periods plant . g . , from demand Peugeot 2014 significantly 6.0 to in decrease of 1 sales manufacture key ($ billion, 2011– ($ billion, production components for and external EcoSport demand for Dacia Duster as well as Ford Higher interestEuropeans of SUVsin todrive due Dacia in Toyota) to during demand 2015 7.4 weak Ford halt Logan, markets to ; 2011 client EcoSport Renault 2016) in for Sandero External 2016 – – Automotive MarketAutomotive Scenario Ford pipeline 2015 France, 2016 , plants 6.8 (one the B and , - Max mainly Russia, South Africa, Iran, Iran, Africa, South Russia, company of for 2011– revenue during total automotive representedof 30% manufacturing Vehicle in Germany particularly its other Ford best 2015 supported B announced Source: ACAROM Source: countries - - selling Max, and its Spain which more cars) 2 by as a ; 32

2017 © The Smart Cube. All Rights Reserved. Note: Lower Demand Cut Manufacturing Volumes Manufacturing Cut Demand Lower ProductionReshuffle by Dacia and Ford, and Country Romania Hungary Poland Slovakia Czech Republic Turkey France Spain Germany . . Country Ranking – Ranking Country VehicleRomania in Manufacturing Total 1) fluctuations Relocation to Romania ― ― ― the Despite Inclusive of Russia and Turkeyand Russia of Inclusive the building Starting Moreover, Logan assembled production In Passenger Cars a European 323,587 dramatic 27,325 2014, 350,912 manufacturing 2010 strong Van the 2012, and Dacia’s in LCVs in in to highly level, passenger Romania decline potential, restructuring , 2012 its Ford by VehicleVolume (2016) Production Commercial Vehicles 335,232 parent plant sought of 310,243 particularly 24,989 the 2011 decreased Ford in by in company car Romania an - light Global Ranking Global company, after Transit Morocco estimated initiatives manufacturing 1 commercial Ford due . 0 27 25 21 20 15 14 11 Connect 8 4 ceased 337,765 EcoBoost is 326,556 11,209 ; – Renault, to 2012 B not this - 30, by Production Volume2010– by Production (units, Max’s by lack 000 among (LCV) production reduced Dacia engines of vehicle during production units partially adequate to and the Spain Source: Romanian Automotive Manufacturers and Importers Association (APIA) Association Importers and Manufacturers Automotive Romanian Source: 410,997 annually the 410,959 ; 2010– European Ranking European 2013 the (LCV) Ford of Source: International Organization of Motor Vehicle Manufacturers (OICA) Manufacturers Vehicle Motor of Organization International Source: major 38 relocated number Logan firm to infrastructure led 2016 production focus vehicle also 13 11 10 not Pick 9 6 5 3 2 1 of , Sandero’s relocated more but 391,434 - vehicles only 391,422 up 2014 manufacturing 12 also and on to in 1 Automotive MarketAutomotive Scenario . . 2016) external lower vehicles 2016 As Ford Sandero, , 359 dropped In second account Romania 387,177 387,171 2016 Production (units) Production per 2015 countries 306 6 were B -Max, APIA, 1,040,000 1,349,896 1,485,927 2,082,000 2,885,922 6,062,562 , 359,306 472,000 681,837 units vehicle demand hand manufactured Dacia domestic of 7 exported . 2 90 as globally % as the . 8 market production 359,306 Logan well 358,861 a % Y for 2016 445 result -o of -Y strong as or Dacia total and and at on to of in in 33

2017 © The Smart Cube. All Rights Reserved. and Car Scrappage Programme Scrappage Car and Clients Corporate by Supported Rise Sales Car . . . . New VehicleNew RomaniaSales in Total residential The In modest Car Scrappage Car Programme Government Initiatives – Scrappage During The restricted were Passenger Cars 2016 Romanian 119,576 106,328 12,434 market and Lowerand VAT 2010 not 814 , Y 2010 - Romanian o fiscally clients, access - Programme Y Key Factors Expected to Drive Market GrowthShortin rebounded – increases 2013 market Commercial Vehicles registered 110,668 to particularly 94,624 15,193 , 2011 851 car funding, new increase – sales by (typically representing 70 e vehicle . g in Strong from Demand Corporate Clients 2016 . – , coupled France for surged by Vehicle2010– Type (units, Romania) in Buses 87,505 72,177 14,076 , Rising Consumer Confidence Consumer Rising 1,252 Dacia 2012 2016 sales driven ( 5 17 with . was and 1 plummeted . %), 0 by % high Volkswagen supported Germany sales Y 82,597 - 68,704 12,730 o 1,163 2013 - imports Y, – to 75% of totalof 75% sales) while primarily corporate ( by 4 models . 5 of strong key %) 100,339 2016) second 82,808 16,171 1,360 and 2014 European due clients demand UK – - to hand Medium Term Automotive MarketAutomotive Scenario ( 2 Advantageous Dealer low . and 3 %) markets from 120,591 vehicles 98,325 20,656 purchasing 1,610 2015 the Offerings both government’s registered (of corporate which power 142,020 115,004 24,538 2,478 2016 Source: APIA Source: many more and and Car 34

2017 © The Smart Cube. All Rights Reserved. Car Sales Car Second . . . . Number of Passenger Cars per 1,000 Inhabitants (2015) PassengerInhabitants of Number Cars 1,000 per PassengerNewRomania inSales Car Total During by grew years Romania 68 Although Passenger in Renault sales ― ― Imported Vehicles imports terms . 0 106,328 tax reach Further, Despite new market, 71,928 34,400 % at 2010 (as in 2008– ( applied 4 308 2015 Romania cars and of 377 . also of 4 ~ imported of % , 500 cars - 2015) 438 infotainment robust which as hand Market Poses Major Threat to New New to Threat Major Poses Market hand stood CAGR Opel, 2015 ) second displays on to 000 per ( 508 80 imported 83 94,624 grew , 66,287 28,337 performance at ACAROM, – which units 2011 to Domestic Vehicles Domestic Romania 90% - . ~ cars 5 hand 3 308 % a 559 at to sold high ( share and launched 2016 typically a 1 passenger second cars in 10 in the posted safety average 2016 . 6 ), 2017 over during % 585 72,177 53,484 18,693 second mainly 2012 hand CAGR – represent new/facelifted 2013– technologies in by Origin (units, 2010– (units, by Origin the cars fleet 2010 light vehicles hand to on lowest 593 2016 per ~ of – age 300 account 2016 market the > 1 68,704 , 47,796 20,908 starting 65% ,000 2013 , new 000 – car government’s ) 15 595 models is sales units inhabitants of ownership . is of 3 the February likely years total stronger ; were 628 largest the with 2016) 82,808 Highest 57,933 24,875 to Source: European Automobile Manufacturers Association Source: Manufacturers Automobile European new 2014 vs selling 775 overtaken decision 2017 continue rate through enhanced the segment foothold sales, ratio in EU’s Automotive MarketAutomotive Scenario to the its by the their remove between 98,325 average of 66,868 31,457 equipment, positive of 2015 the EU period, the Volkswagen, ; share second however, Malta Poland Spain Germany France Czech Republic Bulgaria Slovakia Hungary Romania total the second car momentum mainly environmental surged -hand new age particularly 115,004 82,130 32,874 -hand 2016 the Source: APIA Source: of vehicle Skoda, driven vehicle from 10 rate and and . 7 35

2017 © The Smart Cube. All Rights Reserved. Note: and Diesel Cars… DaciaGasoline LeadsSalesDomestic Both of . . . . 100% = 115,004 units 115,004 = 100% New PassengerNewRomania inSales Car PassengerNewRomania inSales Car Total 1) All currency conversions are at RON 1 = USD 0.246 and EUR 1 = USD USD 1 = EUR 0.246 USD and 1= RON at are conversions currency All appropriate All However, Adoption Despite ( sales gasoline Diesel ― ― ― 2016), 36.6% Diesel EVs bonus (RON Volkswagen Moreover, In Dacia incentives this 94,624 ; 6.0% 55,497 39,122 2011 Romania 2017 cars initiative in 5 and - accounting powered dominated 20 7.3% to Source: APIA Source: light of the , have Gasoline ,000 charging those the hybrid electric to it share of and does ) is 8.9% government public launched lost to stronger acquiring expected vehicles, Skoda $ vehicles both for not 11 72,177 ground vehicles of infrastructure 10.4% 35,151 37,025 30.8% 2012 Electric + Hyrid Electric and ,060 the 1 EVs gasoline have the government hybrids to private . coupled 2 largest raised were and to establish (€ (EVs) any ‘Green 10 gasoline and hybrid 1 , domestic entities 000 – – imported the and share and with by Type of Fuel (units, 2010– by Type(units, Fuel of by Brand 2016) (%, Diesel 68,704 Charging ) 31,575 36,895 up ; 2013 eco support 234 Others Ford Renault Skoda Volkswagen Dacia government since hybrid ones vehicles to higher that in - bonus sales, 20 manufacturers 1.106 new in 2016 ,000 due Infrastructure develop vehicles 2016 purchasing at granted , in passenger stations to a the 35 stimuli , total rising . 82,808 35,805 46,767 with . charging government 2014 0 236 % with countries purchasing 35 30 Dacia ― stalled to by sales and , . 6 and units, Despite Sandero after of price 448 8 concerns Toyota to clients ,975 Programme’ 2020 % car a EVs 27 compensate Dacia high stations dominates during share grew model units) Dacia . sales and 2 2016) or units leads % that also ( accounting a 27 value Automotive MarketAutomotive Scenario hybrid share, Duster power on maintenance 4 98,325 . from Logan 45,199 52,630 during 6 . in 2011 offers for 3 2015 ( purchased % 496 to 4 higher % in - in . 2016 Y for 6 stronger respectively, EVs - vehicles % 2016 high ( Y o- 5 – 0 new was - - . o- against a 2014 . money Y 0 2016 2012– 5 , Y and % for Y $ % rise CO followed , - purchasing 1 o the Y , to drop EVs 233 - ( - sales 2 Y 2015 ) 69. costs o- hybrid due to focus 2015 emissions offer most Y quotient 115,004 growth 7 from 3 (RON – developed increase ,098 57,075 56,746 followed to % 1,183 2016 ) to by with on Source: APIA Source: to vehicles sought- financial of (> tighter 15 lack $ units) price Dacia 5 50%), 4 ,329 cars 1 ,000 total ,931 . to 2 to vs by a of % ) . ; 36

2017 © The Smart Cube. All Rights Reserved. Are Catching Up Fast Up Catching Are Competitors Though Sales, LCV Dominates Also . . 100% = 17,397 units 17,397 = 100% LCVSales and Minibus inRomania New LCVSales and Minibus inRomania Total Similarly minibuses ― ― demand The and units LCV) 75 However, Dacia Imported Vehicles . 9,901 7 LCV 7,571 2,330 2010 its % grew Dokker to as position for and sold 1 in key 44 ,246 foreign the minibuses . Van in 5 contenders % as units, 2016, 11,993 passenger to (an the 9,463 2,530 2011 vehicles, Domestic Vehicles Domestic 1 ,6 LCV) top 7.3% likely with ,59 segment 9.6% - 25.1% s displayed was units, elling supported a cars which 19. the 9.7% Source: APIA Source: 11,771 LCV – confirming 9,859 1,912 6 2012 category, % by Brand 2016) (%, grew most roughly significantly in share – 11.2% by Europe 19.6% by Origin (units, 2010– (units, by Origin popular at the (an 17.5% a its Dacia accounted launch 21 in long 11. 9,637 9,303 2013 model 334 . 2015 stronger 8 7 was % - standing % of CAGR Y , the - and an for o - sales Y upgraded 95% most its during rise popularity 12,019 11,617 Others Iveco Fiat Renault Mercedes-Benz Ford Dacia demand 2014 402 – 2016) of to sales prominent the 3 2013 ,413 version Automotive MarketAutomotive Scenario of as increased overall – a Iveco units) 2016 practical ; 14,547 13,822 sales 2015 brand 725 sales Daily on 27 of . 3 account of and % (an Ford new Y - versatile o- LCV) Transit 17,397 16,952 Y 2016 LCV 445 Source: APIA Source: to of surged 2 high ,968 and LCV (an 37

2017 © The Smart Cube. All Rights Reserved. Note: Eco Through Sales Car New Supports Government Car The Government Support for Acquisition of Vehiclesof New for Acquisition Government Support 1) . . Car All currency conversions are at RON 1 = USD 0.246 and EUR 1 = USD USD 1 = EUR 0.246 USD and 1= RON at are conversions currency All . . Results Scrappage Romanian $ $ residential The Under the government each a individuals ― ― vouchers government appropriate vouchers exhausted high standard are generates Despite The Scrappage 11 1 - new ,233 (RON $ Owners emits days), 1 hybrid, In new , obligation bonuses and Preferential LoanConditions , 1 060 500) vehicle , addition, ‘ ‘ 603 still Classic Scrappage popularity the vehicle’s vehicle . upon 2 substantial < 750 eco which 100 vehicles (€ Programme allotted (RON government they ‘ and in low Classic considered Programme that and 10 older electric -bonus ) offers Scrappage just allocated to g ; if ,000 purchasing eco corporate CO interest, this receive price will scrap they 6 scrap corporate 2 , , Plus than Scrappage – 500 -bonus, 2 ) for and /km, weeks 1 incentive, charging incentive a for be in purchase ’ ) an the 8 and financial 1 the voucher an supports a too a an section owners discounted years Programme as 2016 old ; entities further subsequently, a entire vehicle and EV, additional the country EVs vehicle Programme infrastructure entities hybrid S expensive , that is crappage without a First obtain if the and (valid new incentive awarded entails to year the $ the they 370 receive Government Initiatives ’ lacks from purchase Car hybrids car 13 car enjoys acquisition receive 9 a having for were car scrap ,384 ,000 Plu ’ (RON $ the , Programme that vs that an 185 and the the for 30 s to . is a 1.106 First . . . of . Results (years) >=36 50, applicant’s bank maximum The It This maximum Interest at medium to vehicles Age <36 new 139 interest The and standard basically Car 000), 6 support targets have loan persons vehicles level Programme programme month with excluding purchasing Rate (% of loan) of (% among at Guarantee loan fewer entails loans age 3 only % of a first State State a 40% 50% applied preferential ROBOR through maximum amount – per state residential requirements - entail time 1 that the Automotive MarketAutomotive Scenario plus VAT has power year) -backed for potential population – varies car similar the 2 not price major a Romanian interest for (% of acquisition acquisition of (% Maximum Loan customers loan buyers bank’s generated depending of purchasing guarantee interest buyers price) initiatives in $ 90% 95% 12 (e rate 2015 with . margin , g 329 Interbank . and , obtain (capped rates ) on high only , (RON low aims as new and – the of the – a 38

2017 © The Smart Cube. All Rights Reserved. Note: OverallIndustry Sales in Automotive Components Manufacturing Holds 70% of . . . . . Automotive ComponentsManufacturing Segment 1) automotive Components and Mr acquiring Most billion OEMs supplied According multiple ― ― All currency conversions are at EUR 1 = USD 1.106 1 =USD EUR at are conversions currency All In Smaller plant and . 2011 Stroe, lack 8.4 2014 component 1 in - Federal and by of locations this to smaller , investments the to 2020 Mercedes professionals local produce industry segment manufacturing Mogul’s ACAROM, former vehicle on players producers across 9 - 2012 10.1 the - Benz speed $ include have President 11 manufacturers, ; back with 70% key . 1 notable announced million continuously automatic are automotive Continental’s tyres, componentstyres, and plastic electronic generates appropriate of of The mostThe are subsegments important subsidiaries of low components examples screen- ACAROM, 2013 12.8 gearboxes a production $ Dacia a 331 strengthened wiper clusters $ Source: ACAROM Source: skillsets majority 13 include . CAGR: CAGR: 8 15.8% elements . of 3 and expected production million production million global – in costs Ford may by Revenue Romania the (~70 1 2014 13.9 expansion investment local ; automotive encumber following however, %) the plants is capabilities of components (e. destined 1 the in g ($ billion, 2011– ($ billion, of . : , Ploiesti to growth continuous Timisoara, its overall companies expand Automotive MarketAutomotive Scenario electronics 15.5 2015 by for – segment both opening sales exports, capabilities Brasov infrastructure announced and factory 2016) in new to have the and while reach 2016 17.5 in at plants Romanian Sibiu) offices Timișoara in its 30% 2016 issues $ Sebes 22. and in is 1 39

2017 © The Smart Cube. All Rights Reserved. Note: and SkillGap OffsetOperational Low Costs Changes Fiscal Infrastructure, Underdeveloped Key Market Drivers and InhibitorsKeyMarket and Drivers 1) 1.106, 1.106, 1 =USD EUR at are conversions currency All Inhibitors Drivers AUTOMOTIVE INDUSTRYDRIVERS INHIBITORS AND High High Romania Strong February monthly High in to nearby Poor purchase Strong Lower Strong extra Strong Low Lack Poland VAT money Further, popularity Significant to Attractive Government 2014 excise developed reduction of purchasing average fuel infrastructure equipment bureaucracy wages government popularity 1 ratio ) (to sufficient second presence , and wages 566 and 2017 the programmes price dealer of skill leverage than neighbouring SUVs and fleet km fiscal external countries environmental -hand s from shortage ( – $ power and fiscal 710 offerings overall new of of d age across incentives espite and financial – proximity 24 Dacia some 1 market Bulgaria Romania ) markets ones % that predictability, and in such – in level to production Europe the the ’s a the countries may (for s highlights 20 large due models, incentives of as - – and EU 774 % global related tax of ; RON 1 = USD 0.246 and HUF 1 = USD USD 1= HUF USD 0.246 and 1 = RON automotive has all also, o deter Germany to 2016 (in ld vis OEMs corruption grants km, major on depreciation a 2016 -à vehicles costs oil with considered higher particularly motorway , low -vis foreign business all Romania imported – slump, ), determines for First vehicle figures Germany propensity strong ( than to industry 12 sales investments are 19 ,950 investors encumber Car advantages) fuel in % of network had among as automotive brands) since cheaper of vehicles other and (in km up ( of prices Ford $ to one 2017 their 4 to 2015) Car in the ,096 purchase European the 50 2015 of EcoSport 0.003 including access of Scrappage ) in and beginning was % ) suppliers and 734 cheapest and Romania the focus in ) have and the then eliminated km Hungary to lowest new countries driven ( price first Hungary France ( government’s 2015) of Automotive MarketAutomotive Scenario programmes to higher to new vehicles remain 2017 18 3 average set discounts ( by years % $ cars ( as 790 11 starting value ( increasing 1 up in high , opposed ,882 180 ) both 2019) of plants gross - life per due and km, km car in 1 - Demand and Supply Side Supply Side Demand Side Demand Side Supply 40

2017 © The Smart Cube. All Rights Reserved. Automotive Hubs Automotive Arges,and Brasov TimisImportantAre Most around Pitesti) Timișoaraand Timiș (aroundTimiș . . Sibiu (aroundSibiu Arad ( Key Clusters andMajor Automotive Companies Brasov city) Arges (area Sibiu Arad city) Automotive Romania) Poor offer motorway (around County Brasov Lugoj) “The largest automotive hubs“The in Romania are countyArges the aroundthe area Pitesti (with around city) up infrastructure their or Components Production Components network city)and the cities of Timișoara and Brasov.” close hubs high proximity are workforce that Timis is usually a would Arad Severin Severin - Caras continuous Mare to Satu availability Hunedoara located the connect KeyAutomotive Clusters – Western pain Dolj around Alba the Cluj and point entire Sibiu border become Olt Vehicle Manufacturing large Arges for country, Brasov and Manufacturers important foreign cities Hungarian and with – by County investors, ACAROM (November 2016) (November ACAROM hence industrial Ilfov Bucuresti access motorways Iasi enable which to centres - Automotive MarketAutomotive Scenario key Eastern demand national Largest Hubs Largest locations a roads more (e (in . g extensive . , Central Iasi) to 41

2017 © The Smart Cube. All Rights Reserved. Note: Exporter and Company Largest Romania’s is Dacia Revenue Decision Process Procurement Partner Client and (2016) Headcount ( Key Products Locations Romania Year Parent . . . Company Profiles $ 1) 2) million, 2016) million, The Duster,The Logan, Sandero and Loganmodels MCV amountedvehiclestotalof 88.1% toexported 2016in beingtop the passenger Romania, in sales Dacia car new Dacia Logan, and in Sandero share with Dacia Duster 30.8% a company held the production; domestic vehicle overall the of 89.2% accounted for Group Dacia 2016, In Dacialargestbusinessthe is Romania in revenue) (by and Renault and Nissan operate as separate entities with joint engineering, manufacturing, supply chain management,purchas operate chain Nissan and as Renault separatesupply entities with manufacturing, joint engineering, All currency conversions are at are conversions currency All of Set Company Network 2 Dacia Group Dacia - up in up in 3 sought 3 – . . . . 13,835 5 . . . 1966; Renault ,120. Vehicle Manufacturers procurement Suppliers to company’s Contracts 15% It India, other It 30% Nissan Passenger The ― ― ― ― ― ― -after manufactures RON 1 = USD 0.246 USD 1= RON mainly 35– 0 acquired Key Faurecia which Martur For Central Logan both Dacia Dacia Matrix company providers of Group Argentina 40% Renault has models sold domestically the Dacia suppliers for Vehicle Mechanical 54 MCV have sells cars Dacia with (for production 153 Logistics overall to Renault (France are (for by regulations further has Group’s are till seats) plants (e. sale vehicles to Renault located (creates and mechanical suppliers Plant thermoformed 2016) are g the located procurement comply -Nissan . , Centre - points based) Algeria, compact and benefit of following Valeo in (assembles suppliers in its in matrices in Russia, Chassis 1 Romania : (coordinates in 1999 Logan from with and 80 Europe (for components as other from cars for other well plants plastic Renault budget; for model, cables) South home Logan, are Plant Dacia, the the and suppliers’ Romanian and Dacia’s, as manufacturers, based country’s largest exporter in shipments (manufactures SUVs) other , parts), Sandero Africa, the – county Northern Dacia 49 Pitesti Johnson Nissan used company Renault’s for in proximity manufacturers regions Cortubi Group the for : Iran, Renault and Arges of Purchasing Controls internal Automotive MarketAutomotive Scenario Africa; vehicles e Arges Duster . engages and Brazil, g a aims . , (for wide to amount and Peugeot) Nissan’s its count models in (for and production to exhaust Colombia, 24 range with (e. Organisation’s Pitesti Romania, increase components) for g seats), y, ing and HR activities and ing . to vehicles) , 188 ; while Toyota) of also Nissan facility systems) 30% components suppliers, EURO assembled or Morocco, the Renault another sold of share joint APS and the to of - 42

2017 © The Smart Cube. All Rights Reserved. Note: Romania with a New Car Model Car a New with Romania Ford SeeksSpurLagging to Productionin Decision Process Procurement Revenue (2016) Headcount ( Partner Client and Key Products Locations Romania Year Parent . . Company Profiles $ 2) 1) million, 2016) million, The companyThe accounted exportedtotal of for vehicles in 2016 11.9% production vehicle totalForddomestic the of accounted Romania for 2016, In 10.8% All currency conversions are at are conversions currency All Europe) (except globally as well as locally are sold EcoSport SUVs, which produces also India) (in plant Chennai Ford’s of Set Company Network 2 - up in up in Ford Romania Ford – . . . 2 916. . . . 1976 Ford ,623 Vehicle Manufacturers Key Johnson Ford’ The (for plastic further, to Ford’s model It announced Ford Craiova, Ford 2017 0 RON 1 = USD 0.246 USD 1= RON sells Motor volatile (under anti Ford company plants strategy, B decision manufactured components), - Ford - suppliers Max with shock Controls Company the Romania demand in it B a ’s would the name (compact - under bumpers) Max single to purchasing comply (for US, temporarily led (Ford, suppliers ‘Oltcit’) in produce which in manufacturing Mexico, Yazaki seats), to Europe, Craiova and with passenger staff US ; all operations - Romania acquired based) Kautex International EcoSport are India, the halt reductions divisions will while global Kirchhoff production be China, Textron plant car) EcoBoost by (for sold SUVs are operate terms Ford for for cables), and Automotive Thailand only centralised Automotive (for at various both in on and its engines EcoBoost across 2008 on plastic a Automotive MarketAutomotive Scenario Craiova engines regular Magna conditions a and Romanian collaborative Europe Components components) and Germany are (for plant basis Exteriors and engines abide mainly B 1 suppliers vehicles - Max’s from since ; the ; by global shipped & Group Ford the 2013 the EcoSport Interiors chassis), fall basis ‘One also due (for to of ; 43

2017 © The Smart Cube. All Rights Reserved. Note: Manufacturer in Romania in Manufacturer Components Automotive Largest Is Continental (2015) Headcount ( Revenue Decision Process Procurement Partner Client and Key Products Locations Romania Year Parent Company Profiles $ Elektrobit operations; 2016 figures were only available for CA Products ($2,970.5 million and 2,445 staff), ContiTech Romania ContiTech staff), 2,445 and ($2,970.5 million Products CA for available only were 2016 figures operations; Elektrobit 3) 2) Pirelli (anItaly it Romania; a has also ContiTech Thermopol and tyre AutomotiveProducts,ContiTech Romania Fluid ContiTechrin Romania,manufactu 1) staff), hence total figures could not be computed be not could figures total hence staff), 1,668 ($617.7 staff), AutomotiveContiTech Romania Fluid 1,631and ($222.7 million Romania staff) ContiTechand Thermopol mil million, 2015) million, Total revenue and headcount were calculated using individual figures for the above individual using were headcount calculated Total and revenue at are conversions currency All A Systems, Continental Automotive Continental Romania, Powertrain Continental Romania, Automotive Continental Comprises of Set Company Network 2,3 - - 3 up in up in based tyrebased producer)in Timisoaramanages through R&D its an Slatina in and office Elektrobit subsidiary – ...... Continental 14, 2 . . . . 1998 ...... , Component ManufacturersComponent 546. Elektrobit ContiTech Tyre Elektrobit conditioning ContiTech ContiTech CA and Continental vehicle Continental Decisions It CA Continental CA CA Continental’s local ContiTech network ContiTech ContiTech Continental suppliers 907 RON 1 = USD 0.246 USD 1= RON serves Products Products Systems 2 Romania chassis Distribution divisions displays Continental Romania of Group various are can Automotive Automotive Fluid Thermopol Fluid : Romania : Romania partners Thermopol : control - : Powertrain Automotive Powertrain Pirelli and components Sibiu Timișoara and global made engage (Germany Automotive Automotive Continental Centre have clients CA JV components online at Timișoara : Systems Auto : Romania Slatina : : the with Timisoara Vehicle : Romania : Romania : Romania : internal (CA) globally Bucuresti -based) purchasing central air : Romania : Romania them : -Pirelli : Romania : Software conditioning, Control -Cris Chisineu and Electromechanical Ghimbav purchasing Ventilation level only Tyres platform, has Tools Carei ; - units Iasi mentioned divisions, excluding the excluding divisions, JVmentioned wit after further, a 1 and for large power for registering pipes departments, SupplyOn Timișoara internal although airbags worldwide pumps steering and Automotive MarketAutomotive Scenario use and air on all Romania (by revenue) manufacturer in components largest automotive the ContinentalRomania is Key Clients ($ 704.5 million and and million 704.5 h Pirelliand lio utomotive utomotive n and 541 and n g JV with JV with g 44

2017 © The Smart Cube. All Rights Reserved. Note: Engine Components across 4 LocationsEngine4across Components Delphi RomaniaProduces Electrical and Diesel (2016) Headcount ( Decision Process Procurement Key Products Locations Romania Year Parent Revenue Partner Client and Company Profiles $ 2) 1) million, 2016) million, All currency conversions are at are conversions currency All Diesel ComprisesDelphi PackardSystemsRomania Delphi and Romania of Set Company Network 2 - up in up in – Delphi 8 849...... 1997 . . ,135 Component ManufacturersComponent Additionally, (Poland) for contact Firms with Delphi Delphi Sannicolau Delphi Department Serves distribution (including Delphi automotive 7 RON 1 = USD 0.246 USD 1= RON Delphi Romania Automotive Central US willing Diesel multiple Packard and the Packard Diesel common Mare bodies, European parent and the Systems to systems OEMs Systems (UK engage Romania Iasi Romania Eastern rail doors - company’s based) : firms plant globally diesel Iasi (e. : with and : 1 g : Diesel Europe, . Ineu, , has pumps Electrical interiors) ; Delphi wiring it Purchasing its collaborates engine Moldova located and own Romania and harnesses injectors) Procurement components Department in Noua electronic primarily have Krakow Automotive MarketAutomotive Scenario and for to Key Clients 45

2017 © The Smart Cube. All Rights Reserved. Note: steering wheels manufacturing plant in Onesti and an engineering centre in Iasi During 2016 andDuring Iasi 2016 –2017 OpenedAutoliv TwoOnesti Newin Locations Decision Process Procurement Partner Client and Key Products (2016) Headcount ( Revenue Locations Romania Year Parent Company Profiles $ 1) million, 2016) million, All currency conversions are at are conversions currency All of Set Company Network 1 – - 2017, Autoliv2017, continued its expansion on Romania by inaugurating a new safety belts and up in up in – . . . 8 . 1997 Autoliv 873. Autoliv Romania ,961 Component ManufacturersComponent All Collaborates and Seat Timișoara Autoliv Brasov, 8 RON 1 = USD 0.246 USD 1= RON steering potential (Sweden belts, Romania’s Iasi, airbags, Lugoj, wheels mainly - based) collaborators Purchasing Onesti, with gas generators European Resita, Department are Sfantu required companies for airbag Gheorghe in Brasov to modules contact Automotive MarketAutomotive Scenario and Key Clients 46

2017 © The Smart Cube. All Rights Reserved. Note: $1.1 million Moreover, Takata Romania registered a 13.3%Y- on account ofstrong client pipeline However, Takata declaredEMEA operations its Europe in wouldnegativelybe not impacted bysituation this globally in recent years generated financialby compensations paidconnection in multiplewith faulty airbag incidentsoccurred that In June Takata2017, filed for bankruptcy headcountcountry the in Bankruptcy of Parent Company Parent of Bankruptcy Despite Operations Continue to Romania Takata Revenue Decision Process Procurement (2016) Headcount ( Partner Client and Key Products Locations Romania Year Parent Company Profiles $ 1) million, 2016) million, All currency conversions are at are conversions currency All of Set Company Network 1 1 - to expand production capacity at its plant in Arad by 2018,as well as increase its overall up in up in – . . 4 . . . . 1996 Takata 634. Takata Romania ,347 Component ManufacturersComponent Potential purchases company’s operational however, Takata’s All material Engages Supplies cushions Seatbelts, Arad, 3 RON 1 = USD 0.246 and EUR 1 = USD USD 1 = EUR 0.246 1 =USD RON and purchasing (Japan Jibou, with and to European suppliers - supplier steering all based) individual purchases Orsova parts a major decisions – limited the companythe struggling has been heavy with indebtedness suppliers portal and automotive HQ wheels, are o including range - Sibiu Y surge in revenue in 2016and declared plans to invest plants for in required 1.106 European Aschaffenburg of airbag Asian raw OEMs are to materials fabric and units globally responsible register European are and (Germany) and made on Automotive MarketAutomotive Scenario airbag small raw the for at ; Key Clients 47

2017 © The Smart Cube. All Rights Reserved. Note: Romania LEONIUp Has SetFacilities Mainly in Western (2016) Headcount ( Revenue Process Decision Procurement Partner Client and Key Products Locations Romania Year Parent (2016) Headcount ( Revenue Parent Decision Process Procurement Partner Client and Key Products Locations Romania Year Company Profiles $ $ 1) million, 2016) million, 2016) million, All currency conversions are at are conversions currency All of Set of Set Company Company Network Network 1 1 - - up in up in up in up in 3 . . . . 2001 Michelin 533. – 12,196 559. Michelin Romania LEONI Wiring Systems Romania SystemsWiring LEONI LEONI systems . . . Arad, 1999 ,022 Component ManufacturersComponent based The and Mainly Tyres Bucuresti, level All engages Collaborates Wires, 5 9 RON 1 = USD 0.246 and EUR 1 = USD USD 1 = EUR 0.246 1 =USD RON and procurement Beius, North company’s and Group in and (France optical sells France with tyre Floresti Bistrita America technology its - mainly (Germany various steel based) fibres, products group decisions and and chords cables with Romanian Pitesti provider Zalau - level - based), in 1.106 EU are Romania; and Purchasing and made companies cable a Asian wiring at exports systems an Department suppliers international and to Europe Automotive MarketAutomotive Scenario ; cable also is Key Clients Key Clients 48

2017 © The Smart Cube. All Rights Reserved. Note: Industrial PlatformsGlobally Dacia GroupIsReachTop Renault 5 Poised to Success Stories – working environmentpeople. for Wetryingemployees aremovethe to ideal findwhereneed the we tothem, “The objective is to make Mioveni (Pitesti) reach top largest5 and most important industrial platforms of the 1) investment forthe new range. We will bring more robots havesignificant a contributiongrowingthe to importanceindustrialthe of platform.planWe massive […] Renault Group in the world by 2020.The range of models will be renewed during and2018 2020and will All currency conversions are at are conversions currency All formula to not resort to layoffs.” ...... Vehicle Manufacturers models facilities Romania manufacturing it By In Its As 2017 car EcoSport As state The In In However, vehicles provided Romanian ― ― ― ― ― engages 1999, the (LCV) EcoBoost Daewoo’s following company anticipated Daewoo Starting 2008 of of 2014 Dacia model EUR 1 = USD 1.106 1 =USD EUR privatisation country in replaced Mioveni Starting In In Tanger 2016, 2016, aid same Morocco 2014 2012 , to to , and Renault and Ford as (one Ford provided the Logan, Spain 2012 and Renault’s state had with the had engines the , , Dacia well (Morocco) to stake year, the 2017 1 plant the Dacia with streamline demand . acquired of company 5 purchased $ invested accommodate , segment ; become Romanian company numerous 33. Ford further, million production as Group group’s its , contract Ford Dacia Group Sandero in Logan ; discontinued 2 in the it best plant 2006 million decreased key invested and announced to the Dokker, firm acquired engines a starting at – - MCV was a had operations selling had bankruptcy external Nicolas Maure,GroupDacia CEO,(June 2015) in 72 accommodate and 51 local stipulated least sole government focussed of and also Morocco to . higher % 4 the not production Dacia invested % sold stake manufactured produce owner the the 2017 $ OEMs, relocated cars) by Duster $ stake Dacia 961 country’s met 110 – markets, a Logan demand the production Sandero a ; meaning growthproducts’ of qualitysafer and a , more in $ . however, majority Logan 1 for . in that 221 6 its Automobile in Group which end $ million engines million models higher 2 will agreed 1999 the Pick production the Daewoo . . 2 5 on Ford for largest MCV of was such million be in - billion European manufacturing up , supports from stake building of that Dacia Morocco 1 it partially production the by partially would will and Ford by are as to relocated Craiova business year Automobile 2017 1 the France, to Duster 2019 be to Romanian Logan extend investment targets Automotive MarketAutomotive Scenario highly B the Ford - totally the receive market Romanian modernise Max moved relocated and (formerly to Van highly of of domestic Germany production in and in appreciated manufacture the relocated Ford Dacia produced 2008; light to models, starting state an Craiova exporter to to Renault’s sought term state Transit $ Oltcit) Dacia of produce Renault’s 83 Duster by components repurchased and lower . to which 0 the of - 2010 from to after 810 ; the million Connect in the both Group’s further, plant a several fall - at 1994 2025 than- , Ford , new same plant were 000 the UK the 1 the of . 0 in in 1 ; 49

2017 © The Smart Cube. All Rights Reserved. Note: Automatic Gearbox Plant in 2016 in Plant Gearbox Automatic DaimlerInvestedHighin a million $300+ . produce reliably, flexibly andquality.top in productionstart of The high the of Success Stories – capacityGermany in has been exceededdemand by andrely wevery our muchonlocation Romania.in Here 1) in Romaniain increasescompetitiveness the internationalour of production network.” Production Powertrain & Site Manager,ProductionMercedesSite Powertrain& we can accommodatecan we extra demandan optimum in manner.” – Despite investments “Our 2 Romanian subsidiaries are an important part of our global powertrain production compound. They All currency conversions are at are conversions currency All ― “We are extremelyare “We quality happythe people andRomania.mentality with ingearbox of Our production million In 2016 ongoing in , from the an . . . . Component ManufacturersComponent engine successful Daimler In In operates assemble I the Sebes’ double with for producer company n the ― ― 2014, April the engines, most EUR 1 = USD 1.106 1 =USD EUR German For By Supply Chain Management,Mercedes the production - same capabilities 2013 clutch this 2016 first Daimler under decided luxurious set of collaboration 5 - , new transmissions - industrial speed up auto Daimler , year, entered 7 the - the speed factory manufacturing of to - opened manufacturer Mercedes the company to Star Star invest automatic obtained equipment manufacture the automatic company in Assembly Transmission, with (April 2016) Poland a and $ Romanian 1 $ . - - completed 1 44. - Mercedes and Benz Cars full Benz Daimler, facility, steering billion gearboxes 2 due ownership gearboxes inaugurated name and million vehicles, 9 to - the in automotive speed weapons) a Romania systems poor a - Markus Schaefer,ProductionHead of and JV a Benz2016) (April company car factory $ of for with 331 including infrastructure 9 Star assembly a G Mercedes . - lost 8 $ Tronic Cugir that Transmission 33 received in components million - . Automotive MarketAutomotive Scenario volume 9G volume out Sebes BenzUnterturkheimin Plant 2 E manufactures plant 360 Mechanical million automatic on - $ investment Benz – BlueTEC 41 that 2 in Frank Deiss, Head of of Head Frank Deiss, . significant - 4 Hungary plant Tronic transmission million market would cars gearboxes Plant - components ; in end to in the assemble and Sebes in state potential (a expand 2001 $ plant local 553 for aid to , . 0 50

2017 © The Smart Cube. All Rights Reserved. Note: Producer Component Important Most the Is Continental . . Success Stories – vehicles, develop energy 1) Total a The This means moreresponsibility transferredRomanian to teams.engineers R&D Our focusautonomous on All currency conversions are at are conversions currency All tyre “We have 5,000engineers in Romania that develop products and software for more efficient mobility. allour locationsRomania.” in – company investments distribution also . . . Component ManufacturersComponent . . . . . and following It Continental through Continental tyre ― ― ― ― ― ― ― ― in centre manages However, motorway Western Its Moldova The transport Iasi In Mare 1 electronic Delphi entered local for Elektrobit 2011 2007 2006 2005 2003 2002 2000 - EUR 1 = USD 1.106 1 =USD EUR 2004, efficiency and consumption interconnectivity apps. We need such specialists across strategy Brasov production – company the (Timis) abundant in plants its – – – – – – – Romania production Bucharest border, production Continental ContiTech Continental ContiTech Continental ContiTech Continental Noua, it the a wholly infrastructure in wires is established network ( tyre established also 2016 has the Christianvon Albrichsfeld, General Manager, Continental Romania 2011 amounted Romanian first plant inaugurated opened manufacturing and typically largest workforce to owned ) operates ; , entered Thermopol Fluid Romania plants facilitate it its Powertrain Automotive Automotive Automotive of cables (September 2016)(September in also R&D Diesel diesel a Automotive automotive a and to subsidiary market Timișoara similar been : factory Romania $ facilities (Timișoara) manufacturing centres opened in 1 significant in product Romania . engine 3 division the 2011 Romania plant to software Romania Systems Romania billion in in establish ; area Elektrobit 1998 Romania in components in since an across Ineu components in shipment (Chisineu Iasi 1 1997 inaugurated distance during Slatina (Ghimbav) (Sibiu) (Iasi) (Timișoara) and centre additional with ( – 2006 then, (in (Carei) , facilities 4 followed when lower Timis, a - 1999– locations in in Cris) to ), from $ manufacturer Bangalore the partnership 110. Timișoara (in clients it Automotive MarketAutomotive Scenario wages R&D a Arad 2015 set Iasi) in the company by 6 $ 154. small million up in a Western in through and (India) compensate production the 8 a ( Timisoara 2012 plant with million Caras cities in investment has country in Romania ), the border Pirelli in 2016 Sibiu Severin) close set 1 Sannicolau Hungarian factory facility in for up – and ( 2015 to 2016 3 poor in the and the has for a in in ) 51

2017 © The Smart Cube. All Rights Reserved. Strengthen Bilateral Commercial Relations Commercial Bilateral Strengthen Indian and Romanian Diplomats Seek to ...... Bilateral DiplomaticCommercialand RelationsBetween RomaniaIndiaand outsourcing, Romania relations In gain country’s Indian ArcelorMittal outsourcing Most embassy Establishing The However, manufacturer) ― Other renewable March access footprint Indian investors level examples India’s and membership across 2013 to industries, an energy, firms infrastructure and European in of India being , Extended FDI 1957 particularly Romanian the Cadila a with include outsourcing in the established wide 2 Romania in subsidiaries with destinations Pharmaceuticals countries’ most the Partnership; companies and variety firms notable appreciate prominent European agriculture and is diplomatic low in textile of Ministers in without India examples in compared Romania industries, the metallurgy, Union, example industry Romanians’ is agreement relations any even of operate including which with custom Foreign including smaller, IT, its strong at enables is pharmaceutical in potential taxes the Affairs Genpact, expected the with IT, English legation IT, products pharmaceutical, signed Rulmenti pharmaceutical, Wipro, to proficiency industry, level spur the manufactured Barlad Ranbaxy, bilateral in Joint Trade Agreements 1948 chemical as metallurgy (a chemical, Statement TATA well ball commercial and locally industry, bearing Group, as at and and the the on to 53

2017 © The Smart Cube. All Rights Reserved. Note: Source:National Institute Romanian of Statistics Source:National Institute Romanian of Statistics Exportsand Imports India RepresentsRomania’sTotalof <1% for Romania Romania’s to/from Imports and India Exports 1) 581.6 256.9 Figures for 2016 for semi are Figures 0.6% 1.1% < 2009 2009 1 % of registers Romania’s 688.7 190.0 2010 2010 1.1% 0.4% Romania’s to India Exports a Romania’s India from Imports - trade definitive and mayand changes undergo definitive total deficit exports 544.1 271.8 2011 2011 0.7% 0.4% Imports ($ million, %, 2009– %, ($million, Imports with and ($ million, %, 2009– %, million, ($ India imports 466.8 273.1 0.7% 0.5% 2012 2012 ; – however, byValue Shareand of Overall Exports – by ValueShare and Overallof India 407.3 305.9 0.5% 2013 2013 0.6% 2016) is 2016) not 1 a Imports to India to Imports 1 300.3 241.8 key 0.4% 2014 2014 0.3% trading Exports to India to Exports partner, 267.6 227.9 0.4% 0.4% 2015 2015 Trade Agreements % Share of Total Imports Total of Share % as % of% Total Exports it accounts 270.3 235.3 2016 2016 0.4% 0.4% 54

2017 © The Smart Cube. All Rights Reserved. Rail Carriage Components Carriage Rail Note: Car Production Equipment Production Car India FTA EU Potential from India to Benefit Exports . . Romania’s to/from Imports and India Exports 1) Agreement Trading As food pharmaceutical ― ― ― ― Aerospace Materials Aerospace Dacia Dacia Duster are Logan brandthe and under in sold India Renault Renault Duster and Logan and Duster Renault concerns EU According In Started In Indian rights, of in per Petrochemical Products Petrochemical the 2016 April resuming Ball Bearings Ball no Automobile Parts for Automobile for Parts and the between EU) longer counterpart duty , in 2017 the Romanian on (FTA) consumer has 2007 to Chemical and and Chemical cuts India’s negotiations President , some has stated the raw , in FTA Romania to 2 autos launched materials analysts, Scotch countries’ take negotiations Ministry that Romania’sto/from India Imports Keyand Exports of goods, 1 and ; into the her Metallurgical further, whisky and Products Brexit Devices an Optical Optical spirits, European country account of State official e India . Foreign were tariffs g Source: Romanian Ministry of Foreign Affairs Foreign of Ministry Romanian Source: in is . and , Secretaries likely 2017 is Exports UK’s coffee, invitation would encumbered Commission, committed visa , Affairs, to Angela strong regime, speed also tea, for to opposition there Merkel to encourage Imports Commerce up benefit by Jean and reopen pepper, the differences came -Claude is Manganese Ore Manganese (Chancellor process a Tobacco Iron and and Iron negotiations from on strong Romanian to had rice, granting Juncker, a de of in an a potential areas reaching facto potential of official clothing, firms Germany, Textiles visas declared Pharmaceutical Products Pharmaceutical such standstill meeting to Measurement Gauges Measurement an to to Organic Chemicals Organic as open EU Optical Devices Photo Optical and Rubber and Plastics and Rubber Indian FTA auto diversify his the Trade Agreements intellectual – in India agreement outposts support during largest 2013 workers engines - Free imports which economy in property in and favour as Trade India and the the its of 55

2017 © The Smart Cube. All Rights Reserved. ProductionSitesin India and Vice Versa with Firms Romanian of Number Limited . . . Automotive Companies Doing Business in Romania and India Romania and in Business Doing Companies Automotive Ford India Suzuki Romania Ruia Automotive REGE Consulting Cambric Romania Continental Dacia Ford Romania Barlad) URB (Rulmenti policy Romania due tobetter road infrastructure, and morepredictable and company TATA2015,In Rover Land Jaguar up a Motors setto decided production plantSlovakia instead in of rather acquisitions establishingthan plants their own Indian that3 companiesThe have production Romaniaunits in entered marketthe through Very fewRomanian have automotive firms versaproduction vice India and in sites Company Company Sealynx Group Romanian Companies with Operations in India/with Indian Partners Indian OperationsIndia/with with in Romanian Companies in Europeglobally andin Tyresmanufactured Romania in sold are factories, includingRomania in India ships componentsgroupother to Moreover,Renault’s Chennai plant Renault plants, includingIndia in usedinternally shippedother or to Components produced at external Ford plants,India includingFordexternal in It plant in Gujaratplant in (India)2015 in establishedIt a ball bearing production Suzuki Baleno to Europe Baleno to Suzuki It exports The firm firm India The exports industrialbased conglomerate in acquired was It firm automotive produces sealantsThe production subassembly and casting die aluminium India wasIt Auto,by Amtek acquired an in 2015 anti firmmanufactures The components Europe Technologies wasIt by TATA acquired in 2013 centresin Romania services provides It engineering manufacturesmultiplefor engines - locking braking systems(ABS) - based automotive firm specialising firm based automotive India Indian Companies with OperationsRomania in with Companies Indian - Overview manufactured Overview 2011 by Ruia, 2011 an India - manufactured Pitesti plant are are plant Pitesti Ford Ka+ to Ford through in in for - 3 in in Sales & Service) Service) & Sales Raghu (AreaR Manager Deepayan Das (CEO) Timisoara tyre plant tyre Timisoara Telephone email and telephone General email and telephone General email General email General Masson PatrickOfficial contact: email General email and telephone General email and telephone General telephone and telephone and telephone and and emailand for Contact Details (in Romania) (in Details Contact Contact Details (in Romania) (in Details Contact Contact Details (in India) (in Details Contact 91 908 742 2916 91 989 914 2042 91 124 473 7324/ [email protected] 40 4214 40 356 om [email protected] 40 248 500 000 [email protected] 40 372 516 255 [email protected] 40 235 412 120 [email protected] 40 217 949 830 [email protected] 457 40 348 [email protected] 40 268 306 263 [email protected] 40 372 516 255 40 268 - oriented fiscal Trade Agreements 546 070 063 56

2017 © The Smart Cube. All Rights Reserved. Offset by Underdeveloped Infrastructure Underdeveloped by Offset FDI for Support Government Wages & Attractive Underdeveloped . . support for FDIs FDIs support for AdvantagesDisadvantages and InvestingRomania of in through grants Disadvantages infrastructure government bureaucracy prospects However, Romania regional Strong incentives and fiscal fiscal and Strong government corridors for underdeveloped and dynamic corruption, and bureaucracy and and bureaucracy hub with varioushub with Key automotive manufacturers support corruption dedicated FDIs level of of level access High infrastructure for relatively to FDIs, EU’s low single changes to fiscal fiscal changes to Lower wages vs. wages Lower frequent coupled with high English EU average average EU wages, proficiency Frequent (particularly regime market fiscal strategic encourage changes road position membership and certain domains, certain Skills shortage in in shortage Skills political position proximitykey to Favourable geo and automotive particularly particularly investors European European markets and – at EU EU railway) skill the to shortage intersection - establish Investing Romaniain coupled Fewer employer contributions contributions starting 2018 starting than in other than in may Advantages surcharges companies negatively impacting countries High fuel locations logistics logistics with of hamper several high in 58

2017 © The Smart Cube. All Rights Reserved. Potential in Components Segment Components in Potential See Growth High Representatives Industry Industry Representatives Opinion on Doing Business in Romania in Business Representatives Industry Doing on Opinion terms of hiringofterms and new investments, providedhave we appropriate economic conditions.” – “For we2016, expect strong growth in Romania, across all our divisions. We aim to maintain 2015figures in Nissan Group and Ford, which have operated in Romania for several years. Romania is a country severala country years.for have operated is with avery and Ford, inRomania which NissanRomania Group “ however, vehicle assembly shall grow at higher rate over 2015 fluctuationproductofterms in development and supply;course, and of electrical and hybrid cars are also a EcoSport model at its CraiovaEcoSportitsmodel at plant, coupledDacia’s with updated models, are likelyincrease to automobile opinion,gearbox manufacturinglongerhigh no a is The acquisition [of a local producer] will enable Gestamp to accompany its global the to accompany customers, Renault enablewill acquisition Gestamplocal producer] a The [of customers based in thebased customers country in thethey skills are already with which inother familiar theparts world. of keydriver and representfuturethe because they require dedicated solutions, products, suppliers,[…] etc. productionRomania, in degree aswellas thesourcing of components localfromsuppliers. This likelyis to “The automotive“The industry shall continuewitness to high levelinvestmentsof componentsthe in segment; vehicle sales Europein likelysignificantly are not to increasecomponentsthe on but side, therealways is absorbersSibiu in produced Bilsteinby and electronicsTimisoara in (HELLA,Continental, Kimball).my In promising promising present andfuture intheareour very ableand automobilepleased sectorto to be offer we determine suppliersnoware located that other incountries (e.g,. Turkey)relocatevehicle to closer to “Increasing componentsactivitythe in segmentwill also target higher value whichrequire notdo such components.” – Schaeffler Romania expects a 7 Gestamp aims to increase turnover to increaseturnover aims added manufacturing facility-valueGestampat by Romanian the more including group transfers.” – transfers.” group including GeneralManager, Robert Bosch Romania and Robert Bosch Hungary(May 2016) “The components“The segment has higher potential vs.vehicle productionRomania in – components manufacturers plants.” .” .” – Fancisco J. Riberas,FanciscoChairmanGestamp J. (March and CEO, 2017) – 10% turnover10% increaseindustrialthe in and automotive segments, – Bogdan Financiar Ziarul Redactor, (March Alecu, 2017) SorinPoteras, Manager Automotive,Schaeffler Romania (January 2017) Bogdan Alecu, Redactor,Ziarul Financiar (March 2017) - Componentsto Showcase Strong GrowthPotential focus area sincefuture the belongselectricvehicles, to – 2016. Ford’s2016. initiative to start producing the - add parts – add parts Investing Romaniain Mihai Boldijar, Mihai e.g., shock shock e.g., - 59

2017 © The Smart Cube. All Rights Reserved. Note: Higher Wages Despite Continue to Investments Automotive Industry Representatives Opinion on Doing Business in Romania in Business Representatives Industry Doing on Opinion 1) and increase our workforce from 4,000 from workforce our increase and and well aboveandwell Romania’s average.remainprogressivelyTo competitive, need to we automatise plant. the If the governmentthe If maintainscurrent the FDI policy,beneficial thisa willbe thing, which makes usthink we “I do not“I think that minimum wage growth will encumber the automotive industry; Romania is part the of students and hiredgeneration.first the Students receive scholarships and spendentire the practice period educational institutionsensure to strong poolwork of EU andsalary thus, theEU gap againstmembers otherlikelydecrease, is EU to normal a step expected by all workplaces and invest abovecertain a amount.Bosch, […] Continental and Daimler collaboratelocal with double wage costs vs.Morocco) andRomanian the government supports Theus. company has high trust Mr. Maure left Dacia Automobile at at 2016 March of the end Automobile left Dacia Mr. Maure Romania highlyis performant, whilst Moroccohas only develop started to relevant a poolautomotiveof are on the goodthe are way onRomania and that foreignopen is to investment.expand Surely,towant we locally Romanian engineers, whileMorocco, in ouroperations involve many expats. Further, our supply chain in machinery maintenance.Renault […] willremain Romania, in asouractivity herecompetitive is (despite on whetheron our parent company’smanagement top Germany in wishesinvestanother in to location in players. Hence, thereabsolutely is risk Renault inno leavingRomanian its production facilities. […].” This will also createnew workplaces: need we professionals robotics in and also personnelensure to Continental’s locations in Timisoara, Brasov, Carei and Sibiu. During 2012 in the quality of its local staff – Romania aretheyor considering othercountries aswell.“ – thanks to financialthanks to aids offeredgovernmentthe by companies tocertain create that a number of “Romania has significantpotential foreignfor investors despiteaveragegrowth in wages, “Dual professional schooling, comprising theoretical and practical studiessupported is in “Salaries offeredDacia by Romania as similarthosePoland in to Czech and Republic, the investors.“ in Continental’s factories, guided by mentors throughout the 3 years of study. Nicolas Maure – Anica Stoica, HR Manager GovernmentEncourages Automotive Sector InvestmentsUpskilling;Labour and – SorinPoteras, Manager Automotive,Schaeffler Romania (January 2017) 1 , Former General Manager, Automobile Dacia (March 2016) Former General Dacia , Manager, Automobile Schaeffler Romania (January Romania Schaeffler 2017) at ourproduction at facility, thereonly isone expat, whilearerest the – 4,100 topeople 5,0004,100 in the next 2 Financiar (March 2017) (March Financiar – Romania, ContinentalGroup (March 2015) - ready graduates.” graduates.” ready Higher WagesHigher UnlikelytoDeter Investors Sorin Poteras, Manager Automotive, – – Bogdan Alecu, Redactor,Ziarul 3 years; however, this depends – 2014, we we supported 150 2014, Investing Romaniain ” – 60

2017 © The Smart Cube. All Rights Reserved. Investments in DualInvestments Professionalin Schooling Drives Hubs Automotive Key in Scarcity Labour Industry Representatives Opinion on Doing Business in Romania in Business Representatives Industry Doing on Opinion Recruitment Strategies Exploreand New Investment RegionsRomaniain ShortageLabourEstablished in Automotive DetermineHubs InvestorsCreative toAdopt costlier thanHungarywages.”ofterms in – “The dual another problem schools vs. in170 1989.We are lagging behind countries that understand this necessity. Skill shortage is that in the future, the incompanies that willconsiderhave to otherregions shortage,staff well as due to and move footprintRomania in leadspersonnel to fluctuation, particularly since unemploymentquiterate in is low towards Eastern Romania,Moldavianthe to region.“ – moveonecompanyfrom another, to seeking higher wages. The keydanger Romaniafor is become to “The largest“The automotivethe threat to marketlabour is deficit;increasing numberfirms establishing of ‘talent war’, particularlyhigh for high “It is veryis important“ItRomanian the for governmentsupport toeducational the more system that so Romania. Hence, companiestalentwith new recruitment come willup need toand development - qualified professionalsavailable are labourthe in market. Today,increasinglyface we significant “Western and Central Romania have very welldeveloped automotive industriesthink I but strategies.“ - professional educationwellnotdeveloped: is present at Romania time, professionalhas only 10 – infrastructure issueszerounemployment led to ratessome in areas, where employees – Sorin Poteras,SorinManager SchaefflerAutomotive, Romania (January 2017) - Robert Bosch Hungary (May 2016) (May Bosch Hungary Robert qualified engineers.” engineers.” qualified Romania (JanuaryRomania 2017) Mihai Boldijar, General Manager, Robert Bosch Romania and (September 2015)(September Sorin Poteras, Manager Automotive,Schaeffler – Rolf Breidenbach,Rolf and CEOPresident, HELLA Investing Romaniain 61

2017 © The Smart Cube. All Rights Reserved. Continues to Represent a Challenge a Represent to Continues Infrastructure Motorway Appropriate of Lack Industry Representatives Opinion on Doing Business in Romania in Business Representatives Industry Doing on Opinion Underdeveloped InfrastructureUnderdeveloped a Still Key Issue “Issues regarding the Romanian motorway infrastructure may matter morepotential to new investors than to us.[Dacia We to Automobile] are already here,invested we and willcontinueinvest.new investora to But “Hungaryattracting automotiveremainsstrongRomaniaof termscompetitor a investors, in to supported “Eastern Romania has potentialautomotivefor investments (Yazaki openedwiringBrailainfactory anda value However, companies stillarewaiting motorwaya for between Ploiestiandextensive Bacau, morethe or multinational level). Bulgaria, theon other hand, can only be construed as acompetitor in terms oflow “Lack of motorwaysof“Lack also meanscannot we usepool talent Eastern in and Southern Romania.” – pays infrastructure,attention to economic and political stability, people’s leveleducationof and talent Delphi and Continental have locationsIasi), in butonlybecause has lower wagesit than other regions. by its infrastructure and expertise (particularly inC terms of Targu Mures - add products, such aswirings, segmentsinvestorscan attract that onlyperspectivethe from low of Boldijar, GeneralManager, Robert Bosch Romania and Robert Bosch Hungary (May 2016) ” pool. – Iasi encouragemotorway,automotive to theindustry part.” that in wages.” – Yves Caracatzanis,Yves Group RenaultCEORomania (October 2016) – Bogdan Alecu, Redactor, Ziarul Financiar Financiar (March 2017) Ziarul Redactor, Bogdan Alecu, Redactor, ZiarulFinanciar (March 2017) - level managers strongwith experience at Investing Romaniain – Bogdan Alecu, Alecu, Bogdan Mihai 62

2017 © The Smart Cube. All Rights Reserved. Authorised Individual (PFA) (PFA) Individual Authorised person authorised to conduct a a conduct person authorised to Typically Set Up Local Subsidiaries or Branches Large Firms Willing Investto in Romania Types of Entities ForeignInvestors Can Set RomaniainUp commercial activity Types of entities typically chosen by large investors large by chosen typically entities of Types Registration Governing Activities Allowed Liabilities Rights Deregistration Hiring Staff Aspects Contractual & Law acts as a subsidiary as actswith legal personality typicallyand is a joint stock firm (SA) or a limited liability orfirm (SA) a entityjointa stock (SRL) ...... is a type type on depending amount), capital (e.g., requirements additional by Abides established be will it county where Romanian the of Registry Trade With the legislationRomanian applicable Romanian legislation Romanian applicable by abides it provided activity, Any to the value of of value theto restricted being liabilities subsidiary, All rights Is elaborate and time consuming time and Is elaborate chosen entity of the type on depending liquidationFollows procedures immigration laws with complies restrictions No to hiring policy with respecthiring local provided staff, foreign or name own its under relationships contractual into enters subsidiary A Subsidiary vs.Subsidiary Branch Standalone Company (Subsidiary) Company Standalone of company chosen company of and liabilitiesand with the lie Subsidiary assets – Key Aspects ...... parties third with relations and formalities applies registration to law Romanian headquartered is company parent the where thecountry of law The established be will it county where Romanian the of Registry Trade With the undertakes under its its jurisdiction own under undertakes company parent what the with line In parent company parent All rights liabilitiesand with the lie Is less elaboratesubsidiaries thanfor liquidation involve not does and decision company’s parent Pends branch its of behalf on contract a into enters company Parent has no legal personality, meaning times, be directly related to directly the be times, Branch (Representative) Office (Representative) Branch its activity/legal liability will, at activity/legalliability will, its Branch/Representative Office Branch/Representative parent company parent Regulatory Framework 64

2017 © The Smart Cube. All Rights Reserved. Note: Types Legalof Subsidiariesfor Structures Are TypicalLiability and Limited Stock Joint TypesSubsidiary of Legal Structures 1) All currency conversions are at RON 1 = USD 0.246 USD 1= RON at are conversions currency All Transmission SRL), whilethe 2 vehicle manufacturers (AutomobileDacia and Ford Romania) Automotivemanufacturerspart (e.g., Romania typicallyregisterSRLs as in subsidiaries their ContinentalAutomotive Romania Diesel SystemsDelphi SRL, Romania SRL Daimlerand Star ment Manage Transfer Share Capital Structure holder Share - - ...... acquired shares are distributed staff to distributed are shares acquired SA SRLs for than management of Rules with certainshares, exceptions own its acquire usually cannot SA An compulsory not is Registry Trade the with transfer of Registration registry shareholders’ the in entry its upon effectiveis transfer The parties third or shareholders between Unrestricted incorporation upon capital subscribed of 50% cash in pay must shareholders public subscription, of case In bonds as well as shares, preferential SAs canissuenominative bearer, and incorporation upon paid be must capital subscribed of 30% least At 0.1) Minimum 90,000) capital share Minimum Minimum shareholders of number maximum on limit No dissolution claim may person its interestedany months, >9 for shareholder single a has is more more is Joint Stock Firm (SA) Stock Firm Joint value ashare of – the company if shareholders; 2 suitable for large companies large for suitable – Joint Stock vs. Limited Liability Limited Stock vs. Joint are more rigid more are – operateSAs as $22,191.3 (RON $0.02 (RON , e.g., e.g., to to ...... An SRL cannot cannot SRL its An acquire shares own with the Trade registered be must and term the of 30-day expiry The transfer becomes effective becomes transfer The person opposition to granted term interested any shareholders’ approval and a30 to subject is parties to third Transfer shareholders Unrestricted between shareholder the main by run often are SRLs the applicable legislation regulated under and Rules of management flexible more are Minimum Minimum 2 Minimum SRLs are not allowed to do the following: the do to allowed not are SRLs incorporation upon paid entirely must be capital Subscribed 10) – share a of value Minimum limitations: following possible is with ownership Sole ― ― ― ― ― the position of manager is is not of the position manager Limited shareholder in another SRL another in shareholder A 1 sole shareholder of more An individual/legal entity cannot be a instruments Issueshares as negotiable financial Issue bonds subscription public through established Be 1 - shareholder SRL cannot be sole be cannot shareholder SRL share capital shareholders, maximum maximum shareholders, Liability Firm (SRL) Firm Liability Regulatory Framework – $49.3 (RON$49.3 200) R egistry $2.4 (RON $2.4 than 1 than post post day -day SRL the the 50 65

2017 © The Smart Cube. All Rights Reserved. Note: and main features, statements of of statements responsibility main features, and company’s approval on branch incorporation incorporation branch on approval company’s for Establishing a Subsidiary vs. a Branch RomanianLegislationEntails Different Steps 4) registered be will branch the where 3) 2) statutory their regarding organstake shareholders’theof company in decision and apostilled); and 1)

Register the branch with fiscal withbranch fiscal the Register authorities Key Steps for Establishing a Subsidiary Registration may require additional documents, such as parent company’s financial statements HQof proof such documents, as and ownershipparentfinancial company’s Registration may require additional as ‘branch’)thea HQ, term well as its (meaning forms and name,legal ‘sucursala’ the parent company’s includes name Branch HQ location Company of registration ownership may and documentsidentity require documents, shareholder including additional samples signature responsibility; of statements managers’ and shareholders’ and association, of articles company’s The of representatives, and samples samples and representatives, their of of Decide on main features (e.g., company company (e.g., features on main Decide Prepare company documents documents company Prepare signature (notarised and apostilled) and (notarised signature Fill in documents mentioned at the at mentioned documents in Fill name, capital value, shareholders, managers and object of activity) of object and managers Fill in documents mentioned at at mentioned documents in Fill Register the company thecompany Register and its Prepare and sign company company sign and Prepare shareholders with fiscal fiscal with shareholders the Trade Registry the Trade Trade Registry Trade Decide documents authorities – on parent parent HQ 1 4 2 6 4 2 9 7 5 3 1 5 3 1 8 6 4 2 of submitting file submitting of within business 3 Registry days the Trade certificatefrom the registration Receive Decide and representatives (the reservation is valid for 3 months) 3 for valid is reservation (the Reserve contribution their transfer to shareholders account bank to a allow Open of file submission file of days business within 3 Registry the Trade from certificateregistration the Receive Decide Obtain object on on the name with the Trade Registry Registry with the name the Trade a of bank HQ main activity) Regulatory Framework letter and features of managers (notarised (notarised managers of their of worthiness nd the place nd powers, (name

3 ,

Branch/Representative Office Branch/Representative 66 a Establishing for Steps Key

2017 © The Smart Cube. All Rights Reserved. Note: Work Inspectorateupon Hiring First Employee All Entities Required to Register withTerritorial copies All . . . Company ...... Aspects of Fiscal and Labour Bureau Registration Aspects Labour of Fiscal and 1) EnvironmentalAuthorisation (issuedby the Ministry of EnvironmentandWater Management), establishment Court Unique Document Password setting Companies leads Employers online Upon safety labour started number a Firms All currency conversions are at RON 1 = USD 0.246 USD 1= RON at are conversions currency All is with National Foreign Documents After România’) Fiscal radiere Management 3 There are specificno regulatory requirements for automotive companies that wantto set up which likelywhichposesstricter requirementsfor manufacturers vs. less firms environmental with potentially no documents offices Romania;in however, as is the case anywith other company, they requirean the general to also hiring registration regulations union Documents General registration up approval Registration/Declaration work a pentru for entities Territorial Agency and fine of have a that that necessary the collective the more establishment to will country provide in of in do represent to Registry persoanele individual first Romania’ have $ with be of depend 1 of apply original, hazardous with not certificate Work ,233 Fiscal fined - employee level its 21 work for the effective remit ITM, to (RON for registration Inspectorate or the them on $ (‘Declarație Administration labour Territorial ITM 370 along juridice agreement more company’s Evidence labour a work (CUI) the ITM 5 company’s ,000) for in with (RON management of impactconsultancies) (e.g., contract firm negotiations registration employees with environment a contracts străine Work certificate an Work Mentions 1 (ITM) of de ; receives , 500 also, individual he/she If . . . Employee Employees), inregistrare object ; (ANAF) Health Inspectorate the ) degree One Employment Individual to care of 1 if for to are have obtain in the with a employee (e. a will for copy ITM of firm each au & as Romania with company labour g Romanian for activity Documents to . Safety the have , follows Foreign locul till industrial fiscală/Declarație login work has each the conduct the unregistered the company the record to contract, > does highest Authorisation de company 15 and contract credentials : dedicated have of fill registration following county Corporate employees, exercitare identity in manufacturers) negotiations are not a to completed typically declaration each contract have where register has 016 day for de card, ; code company occupational a to Entities an its Regulatory Framework mențiuni/Declarație after Revisal form it conducerii stricter ; fill on level staff with birth is employment declaring and stating established an the in – of can (the ‘Declaration has with a the employee certificate a for possibility education Request registration this establish health efective to firms dedicated false Romanian Effective register ; record, there with data and has and for de of of în a 67

2017 © The Smart Cube. All Rights Reserved. Appendix Romania (Counties) Appendix No. 10 9 8 7 6 5 4 3 2 1 26 Botosani Suceava Vrancea County Neamt Buzau Bacau Galati Vaslui Braila Iasi 25 28 29 5 – 30 Economic DevelopmentEconomic Regionsin 20 27 No. 20 19 18 17 16 15 14 13 12 11 31 21 6 23 32 35 4 Dambovita 33 Teleorman Mehedinti Constanta Ialomita Prahova Calarasi County Giurgiu Tulcea 22 Arges 36 24 34 37 7 13 16 38 39 14 3 No. 30 29 28 27 26 25 24 23 22 21 1 42 40 17 15 41 3 Caras Hunedoara 8 Satu Mare 1 2 5 9 County Valcea Bihor Timis Arad Gorj Dolj 7 18 Olt - Severin 4 19 2 10 6 8 12 No. Regions Development Economic 8. Bucharest 8. Center 7. Northwest 6. 5.West Oltenia Southwest 4. Muntenia South 3. Southeast 2. Northeast 1. 42 41 40 39 38 37 36 35 34 33 32 31 11 Bistrita- Maramures Bucharest Harghita Covasna County Brasov Mures Sibiu Salaj Alba -Ilfov Ilfov Cluj Appendix Nasaud 69

2017 © The Smart Cube. All Rights Reserved. State Aid Scheme GD 2014/807 GD Scheme Aid State Appendix Activities Household Other Spectacle, Public Administration Real Financial Repair Bulk . . . Construction Production ...... Processing . . . Extraction Agriculture, Repair, Construction Construction Manufacturing Manufacturing Metallurgic Manufacturing Manufacturing Manufacturing Manufacturing Textile Production Production Fish, Other Civil Building Extraction Extraction Extraction estate and services and of engineering seafood retail speciality intermediation automobiles of fibre maintenance sector cultural defence industry activities construction transactions and forestry extra of of of of of industry trade processing services distribution peat raw superior of of and tobacco alcoholic - of of of of of of territorial military ships and construction : administration oil and steel weaponry synthetic explosives basic coke shell as – and recreational and household and and and Economic Sectors Not EligibleSectorsNot Economic for and fishing and products (fuel) processing recipients, organic beverages motorcycles battle natural of installation organisations support boats insurance inferior and electricity and and vehicles ; chemical personnel artificial social gas ammunition activities products services containers and coal of , protection preserving heat, and machinery fibres products employers obtained organisms gas, Sector and hot similar in and pulic from ; water production equipment products systems tar and processing air of conditioning goods for self - consumption Appendix 70

2017 © The Smart Cube. All Rights Reserved. State Aid Scheme GD 2014/332 GD Scheme Aid State Appendix Energy Transportation Synthetic Ship Steel Closure . . Commercialisation Primary Fishing When from When and industry and of primary production boat granting the fibre uncompetitive aquaculture value construction sector producers aid of and of – is the agricultural processing conditioned Economic Sectors Not EligibleSectorsNot Economic for mines aid or is commercialised established produce of by agricultural partial based by or Sector total them products on the transfer price in the to and following primary quantity producers cases of such : produce, Appendix acquired 71

2017 © The Smart Cube. All Rights Reserved. Relevant Links Relevant Transparency International AutomotiveManufacturers Importers and Association Association of AutomotiveAssociation Manufacturers of Romania Romanian National AgencyFiscal of Legex.ro (comprehensive World WorldRankings Business Doing of Ease Bank Romanian National Institute Statisticsof Romanian Ministry of Public Finances Bank WorldwideBank GovernanceIndicators Institute& Peace for Economics Index of Economic Freedom EconomicIndex of National Bank of RomaniaNationalBank of Entity/Institution Fiscal Code 2017 Code Fiscal InvestRomania (ACAROM) (ANAF) (APIA) Corruption PerceptionIndex sourcefor legalmatters) Administration www.info.worldbank.org/governance/wgi/# /Cod_fiscal_norme_2016_10012017.htm#A www.static.anaf.ro/static/10/Anaf/legislatie www.doingbusiness.org/rankings www.heritage.org/index/ranking www.investromania.gov.ro/web www.transparency.org/cpi2015 www.economicsandpeace.org www.insse.ro/cms/en www.mfinante.gov.ro www.acarom.ro/en www.apia.ro/en www.legex.ro www.anaf.ro www.bnr.ro reports Link 43 Appendix 72

2017 © The Smart Cube. All Rights Reserved. Note: 2016 Corruption Perceptions Index (lower position indicates higher level corruption) of indicates higher position Perceptions (lower Index Corruption 2016 Worldwide Governance Indicators (WGI) IndicatorsGovernance Worldwide Parameters in Recent Years Recent in Parameters Considerably Improved Thailand Indonesia India China Arabia Saudi Romania Malaysia Korea South UAE Japan Country Saudi Arabia Saudi China UAE Thailand Malaysia Indonesia India Romania Korea South Japan Country A upgraded with India Introduction Political Stability Easeand Business of Doing 2) Total number countries:of 176 1) Total number countries:of 214 higher other ranks WGI Sabha (upper house) (upper Sabha Rajya and house) (lower Sabha Lok comprising parliamentary system bicameral with a republic democratic a is India India’s Political Regime developed close score rating to Accountability symbolises Voice and Voice China Asian on 20 24 36 52 61 62 69 79 4 5 Global Ranking on most economies, a 101 90 79 79 62 57 55 52 24 20 few better WGIs, Violence/Terrorism parameters, Political Stability Stability Political and Absence of of Absence and governance except such 28 27 71 16 54 25 17 55 52 82 1 constitution the defending and preserving and positions, constitutional key of heads appointing for responsible a 5 for elected is President The 2015 as for Head of State year term and is is and term -year but Japan voice Index Value Index quality it Ranking onAll WGI still and 35 37 40 40 46 48 49 53 66 72 and Effectiveness Government Government needs South accountability 61 68 92 66 77 46 56 52 80 96 to Korea undertake ; Regulatory Regulatory during other improved Over Perception bottom In Vigilance anticorruption back (ratings Political and Political and Economic Overview Quality 2016 55 44 83 63 75 47 40 72 84 85 of a Asian 2010 2013– lot directly by the the centre by directly administered are UTs the of most government, own thewhile states elect their (UTs); territories union 7 and states 29 comprising union federal a is India measures , remained half Commission India, Regional Organisation of from Index – countries, 2015 Source: Transparency International Source: Transparency Rule of of Rule 2016 measures of Law 65 44 75 54 72 40 56 61 81 89 agency along 94 , , taken the in the to Source: The World Bank Source: World The similar India’s 2 stood with World Corruption 79 Corruption to Control of of Control – by catch Central on India’s 60 50 83 44 66 38 44 58 70 91 range) in many rank Bank the the up 75

2017 © The Smart Cube. All Rights Reserved. Note: Develop BusinessEnvironment to Reforms Structural Various Implemented India Saudi Arabia Indonesia China Thailand Romania Japan UAE Malaysia South Korea Country Romania Malaysia Korea South UAE Country Romania Malaysia Japan Country India Arabia Saudi Thailand China UAE Korea South Indonesia China Indonesia Arabia Saudi Thailand Japan India 2017 Index2017of Economic Freedom (lowerpoorerhighlightsposition economic freedom) state poorer of peace) outlines position Peace Index (lower Global 2017 Doing Business 2017 Ranking (lower position indicates poorer ease of doing business) indicates ease poorer of doing position (lower Ranking 2017 Business Doing 1) Total number countries:of 190; note slide in continued Global Ranking Global Global Ranking Global Ranking Global 130 137 133 120 116 111 143 94 91 78 46 36 34 26 23 39 27 23 25 29 10 65 47 52 84 64 55 40 5 8 payment structural connection the by India’s Index Value Index Value 1 position 2.541 1.637 1.408 2.474 2.286 2.242 1.944 1.823 69.7 52.6 73.8 74.3 76.9 1.85 61.9 64.4 66.2 69.6 57.4 back 1.6 doing reforms system of business in process, 2016 simplified and (vis infrastructure framework, legal reforms private insurance its Although fiscal acquisition implemented on ‘mostly susceptible India threats Pakistan shared conflicts and relatively improved 2016 4 India’s ranking electronic - various Political and Political and Economic Overview account à positions ) - deficit vis rank falls defence and unfree’ electricity ; and improved 2015 1 also border on the less India are international Source: Institute for Economics & Peace & Economics for Institute Source: improved other sectors of on to investment, under the ) regulatory its tax and on makes yet country’s domestic its (vis category security Source: The Heritage Foundation Heritage The Source: opened back to score - weak large poor à with land and - the vis be by to of it Source: The World Bank Source: World The 3 2 76

2017 © The Smart Cube. All Rights Reserved. Note: Taxation Regime Enhanceto Efficiency Stabiliseand Automation . . India’s PolicyFiscal after tax creditother and in slidefacilities;note fiscalcontinued 1) of will The Alternative Typical ― The report ( report The Taxpayer Base tax According 100 largely Expansion of of Expansion make implementation Automation 2016 and paperless based system all The deemed taxed Non Stable simple resulted indirectly taxes Paying Taxes 2017) Taxes takes Paying into account effective taxes reflect contributions,and which the actual amount frompaid taxable income due the ranked - Tax the launch resident to GST to tax and tax % –17 Fiscal Developments a and on (MAT), on will the 2016 to indirect from among tax base in structure contributions of income efficient inclusion automation be arise assessment % of entities report creation India VAT comprehensive GST the the implemented directly taxes and 1 combined bottom Goods of by taxation that will Central a PwC, of ‘post that and and 5 and be or is a countries India - filing and corporate Sales Services ranks reduce index’ Tax 172 (CST) Tax entities criterion the on (GST) cost ease tax the concessional companies Newly 30% Tax will correspondingly, – 2 need , by of of wherein exemptions Key Modifications company also goods the paying rates to established to Political and Political and Economic Overview Indian be pay on India will taxes phased base are the 25% does in Government be scored (a India tax back entitled tax Y out reduced - not manufacturing o- rate by Y an Incentives Withdrawal Taxof Phased Tax Rate Concessional of include incentives drop claim cascading abysmal of 2020 25% in to from of any July 15 Minimum ; if a 4 places), effect out 2017 of , 77

2017 © The Smart Cube. All Rights Reserved. Note: . . . Among NeighbouringEconomies Highest Rate, Tax Income Corporate India’s . India’s PolicyFiscal in Corporate In gradually India’s particular tax 1) The received ― United Arab Emirates levies 0% statutory tax 0%corporate statutory levies Emirates Arab United certain China, Companies < rates 18 corporate . corporate 5 % - small reduce cases, 20% or regions tax to of 20% deemed the are rates state scale tax additional book the also tax 25% - in rate encouraged enterprises current to profit rate liable Asian accrue for tax is to Tax Rate countries foreign Statutory Corporate rate 24% among pay benefits from are to and a MAT (2017) 25% taxed companies India – the high are by Country are 24% of highest usually at 18 - offered technology Source: Deloitte Source: . lower 5 % in (on 24% in the to India rates the the foreign same enterprises company’s stands – region, 25% 10% for companies 30% both or at but adjusted 20%; Political and Political and Economic Overview 40%, and foreign the the to which government entrepreneurs attract profits) country and Japan Indonesia Thailand Arabia Saudi Emirates Arab United India China Korea South Malaysia is domestic levied investment if the also is tax on offers planning working liability countries, income lower is 1 to in 78

2017 © The Smart Cube. All Rights Reserved. Note: Offer Access to High to Access Offer India’s Trade EmergingTies WithEconomies . . . India’s International Relations 1) 2) Laos,Brunei, MyanmarCambodia, and Vietnam ASEAN Cooperation which East G India, Development unions/organisations, Association The country Myanmar, emerging India (IMF) India Free (SAARC) respectively aims Sri all Bhutan, members Association of Southeast Asian Nations (ASEAN) Nations of Asian Southeast Association 10comprise member states MERCOSUR is a Latin American trade bloc that comprises Argentina, Brazil, Paraguay and Uruguay - 20 goods Lanka ; Organisation World Trade Trade is to and country and China 1 the shares a – India India’sInternational Membership in Unions/Organisations also gradually the India and member – traded – the Southeast are countries Bangladesh Area International India, offers Maldives, and a Council Nations Asia United Foundation United for has Free members Bank member is its in (SAFTA) – South of reduce easy the Afghanistan, Europe part Trade signed Regional numerous border (ADB) Nations Free Asian region including – Nepal, access of and of Africa agreement, of Area custom such SAFTA Monetary ; the Trade the Brazil, markets, to (UN) with Pakistan South to Pakistan international Cooperation (BRICS) South agreements, Bangladesh, 0 the ; as the India duties Area all various Russia, Middle SAARC China, which ; Asian Asian Asian - – Fund ; with Gulf growth Markets growth and and the the South Asian Association for Association Asian South BRICS on Regional Cooperation . . . As Liechtenstein countries Switzerland, Singapore, Portugal, Norway, Myanmar, Luxembourg, Kazakhstan, Greece, Denmark, China, Bangladesh, which India between products reduce Agreement treaty Association India ASEAN protection market – Indonesia, Malaysia, Singa the Malaysia, Philippines, Indonesia, part is is Secretariat will access also in their Croatia, of Hungary, the also and negotiations Pakistan, – Asian Development and India Romania, Monetary Fund Estonia, Slovakia, part cover (EFTA) the Belgium, International (PTA) parties Switzerland, fixed Thailand, eventually – Korea, to government Political and Political and Economic Overview – for Malaysia, includes of businesses, MERCOSUR Cyprus, Indonesia, Bank , Netherlands, and , various the tariff a a India Finland, Brunei, the free trade Slovenia, the an Laos, with Asia the create preferences EU Iceland, the and trade procurement Philippines, – goods European Russian bloc Australia, intellectual Ireland, representative Europe 2 Malta, Bulgaria, UK, Latvia, France, Preferential pore, Thailand, a Czech MERCOSUR Spain, comprising agreement New free Vietnam, and Norway Foundation Italy, Federation, Free on Cambodia, trade Mongolia, Lithuania, Germany, Republic, property services, Sweden, Zealand, Austria, Poland, certain Japan, Trade Trade ; area four and will the the 79 ,

2017 © The Smart Cube. All Rights Reserved. Note: Growth Rate Growth - Short Impact to Demonetisation . Outlook GDP GDP GDP Analysis GDP 2) F note slide stands in for forecast continued value; 1) 3.9% agricultural Following years The financial year ends in March of every of year in March year ends financial The 8.5% – Constant Prices FY2016 billion $1,807 on the a output 1 decline 10.3% back . medium term country stillis expected toremain one of the fastest- respectively, on the of the back government’s demonetisation however, policy; the India’s cut IMF the 2017, growth forecast January pps, In by 0.4 for FY2017 ― of and note withdrawal and exchange initiative.” andexchangewithdrawal note shortages cash by induced and payment disruptions associated with recentcurrency the lowered growth theprimarily forecast“We due negative to the consumption shock during increase stronger 6.6% FY 5.5% to demonetisation growth, In rates) higher Agriculture, servicesrelatedto broadcasting and communication transport, hotels, Trade, Manufacturing Public Administration, services other and defence GDP Percent GDP Change 2011– Strongest Source: ‘World Economic Outlook’, IMF IMF 2016) (October Outlook’, Economic ‘World Source: average in FY business 2016 private and consumption 6.5% FY (%, FY2008 (%, witnessing 2012 , higher - 7 forestry and fishing performing Sectors in FY2017 FY2017 Sectors in performing the . 3 investments consumption, Value[GVA] Added at Current Price) % , 7.2% GDP effect, GDP in public 7.9% 1 the Sector – (state growth a FY2021F – (at decline H Constant Prices however, spending 2 constant pay 2017 6.8% spurt rate 2 – ) hikes, IMF (January 2017) of and in the in ~ India 7.2% prices) 1 manufacturing remonetisation, ~ % GDP term GDP GDP term 7 . 7 7.7% Y has growing economies in the the in growingeconomies % - – o growth reported Growth Rate (Gross Growth in - Macroeconomic Overview Macroeconomic Y stabilised 2018 on 7.8% 3 rate Y- account sector, on o lower a 7.9% - over Y Growth Y is the 10% 11% 10% 17% 6 . 8 expected % rebound back lending the of Y 8.1% - the o recent of - Y in 80

2017 © The Smart Cube. All Rights Reserved. for for InflationTarget4% by Set Indian Government Outlook . Inflation Analysis Allocationof Rice Under Policy Measures:Policy Higher FY2016 to to FY2016 Set FY2020 at 4% System to Control Food SystemControl to Anti government initiatives tocurb rising food prices, has helped control inflation in particularly food relatedand products; however,coupled with prices, crude oil in decline – FY2008 During RBI: Inflation target for for target Inflation RBI: Public Distribution Distribution Public Period - 9.2% inflationary Policy by by Policy inflationary Inflation (+/ 10.6% - 2%) . . 2013, the Indian economy was plagued by high and consistent and byplagued high inflation,Indian economywas the 2013, 9.5% domestic non- India facesinflation dueexchange to risk rate volatility,and prices, oil global FY2020 to FY2016 period Indian governmentthe AugustIn 2016, adopted inflation an targetfor the 4% of 2020 FY2016–2020 Inflation PercentInflation Change 9.5% Tradable Prices (particularly coal and edible oils) edible and coal (particularly Prices Tradable Downward Trend in Global Commodity and Commodity Global in Trend Downward 9.9% Source: ‘World Economic Outlook’, IMF 2017)IMF (April Outlook’, Economic ‘World Source: oil and nonand - oil 5.9% 9.4% – FY2008 (%, Additional Factors Factors Additional food inflation Key Factors 2013– 2013– – AveragePrices Consumer 2016 2016 4.9% 2021F) 4.9% 4.8% 5.1% Macroeconomic Overview Macroeconomic Decline in Housing and and Housing in Decline Transport Inflation in in Inflation Transport International Crude Crude International 5.0% FY2014 Drop in in Drop 4.9% Prices 4.9% 81

2017 © The Smart Cube. All Rights Reserved. India an Attractive Investment Destination Investment Attractive an India CostLow and Easy Availabilityof Labour Makes Labour MarketLabour Analysis . labour A ― Germany key Further, industries) 46.4 Madhya Pradesh Madhya Andhra Pradesh Andhra feature Uttar Pradesh Uttar Maharashtra West Bengal West Tamil Nadu Jharkhand Karnataka abundance Haryana Canada gives Gujarat 38.3 Odisha that Bihar Minimum MonthlyWagesMinimum forSemi the helps of country 35.4 Global Hourly WageHourly Global Comparison US unskilled India a competitive attract Japan 35.4 and Source: ILO; State Labour Departments Labour State ILO; Source: semi foreign Singapore Source: Ernst Young& -skilled ($, 2016) ($, 21.9 advantage ($, 2015) ($, investors workers Korea South 17.7 - over skilled Workersskilled (which is its – the Labour Cost Brazil Asian 12 are easy 81 peers 84 86 primarily availability Taiwan 90 – 93 9.2 India India 95 Macroeconomic Overview Macroeconomic used 105 109 China 2.8 and in 114 115 118 low 119 low -value India cost 0.9 -add of 82

2017 © The Smart Cube. All Rights Reserved. Note: of the Neighbouring Countries Neighbouring the of Most With Compared Rate Unemployment High Labour RateLabour Analysis 1) Usual Principal Activity measures the unemployment rate as a percentage of the total unemployed workers in the country’ the in workers unemployed total the of percentage a as rate unemployment the measures Activity Principal Usual . . 7.7 to rise from 17.7 million in 2016 to 18 million in 2018 in million 18 to 2016 in million from17.7 rise to the ‘Make(primarilyof theIndia’on back in campaign), actual unemploymentexpected is Though country’s the unemployment rateexpected is toyears comingdown the goin industrial populationgrowth slow and rate India’sIn FY2016, unemployment rateup tofive shota year rising of high back the on ― The ‘Make in India’ initiative aims to create 100 million new jobs by 2022 by jobs new million 100 create to aims initiative India’ in ‘Make The Bangladesh 7.4 Sri Lanka Sri Pakistan Country China India UnemploymentRateUPS Basedon 6 Source: Ministry of Labour and Employment, India Employment, and Source: Labourof Ministry 5.0% 6.1% 4.9% 4.5% 4.0% Rate Unemployment Rate 4.7 (%, 2015– (%, Source: CIA Source: (2016E) 4.2 2016) 1 – Approach Approach by Country is is expected to by 1.1 reach billion population continues to rise and and to rise continues population India’s of share age working 3.3 – by State/UT by 2.1 2050 Macroeconomic Overview Macroeconomic 1.5 s total labour force labour total s 0.9 83

2017 © The Smart Cube. All Rights Reserved. Note: India by FDI Equity Inflow FDI EquitybyIndia Automobile Country US Netherlands UK Japan Singapore Mauritius . . FDI FDI PolicyFDI FY2010 2) 1) 3.3% During skilled exchange, With equity Bangalore ― During FY2001 The base year for the graph is taken as 2000, and both the years represent the cumulative FDI investment till year is the FDI that taken as for The 2000, till base year graph the investment the cumulative represent both years and Marchend in companiesyear Indian and for India Financial fifth Annual FDI Equity Inflow and Share of Automobile Industry Industry Share and Automobile of EquityInflow FDI Annual – services, computer software and hardware, construction and real estate, and telecommunications) and GM, Some 37,745 Top Contributors(FY2017) - largest shareannual in inflow FDI net (afterservices, computer software and hardware, construction the FY2011 and Honda, inflow 3.7% FY leading 2001 relaxation also

the 34,847 low – – Mercedes, FDI Net Flow Net FDI FY2012 - FY2017,the automobile industry held the fifth- – attracted overall car cost 2.0% FY the – FY2010 ($ million, 2017

manufacturers 46,556 % of Total% FDI labour inflow of - Fifth Industry, FY2013 FDI , 4.5% Renault FDI considerable Mumbai 16 34 6 6 7 8 CAGR: CAGR: 2.04% has inflow includes 34,298 norms % Share of Automobile Industry Automobile of Share % and real estate, and telecommunications) FY2014 encouraged – 4.2% Nissan that ( Source: Source: in

31%) 36,046 in investment FY2017) the have investments and FY2015 sectors Department of Industrial Policy & Promotion & Policy Industrial of Department 6.0% and country already Volvo

multinationals 45,148 1 New FY2016 such – FY2009 During in 4.6% established is investmentIndiamillion, in stood at$7.62 ( respective accounting for <0.01% of the totalinflow the of foraccounting <0.01% Delhi 7 55,457 Source: Source: % expected as largest largest each) FY2017 defence, 5.0% ( largest sharecumulative in FDIinflow (after Department of Industrial Policy & Promotion & Policy Industrial of Department 20%) to 43,478 their set state to received FY2017, Romania's cumulativeFY2017, up R&D telecom, surge Cumulative FDI Equity Inflow and and Cumulative Equity FDI Inflow R&D and Share of Automobile Industry Automobile of Share Automotive Sector Overview centres 105,274 Sector in FY2010 ; 4,565 Others nearby ($ million, 2010, 2017) 2010, ($ million, centres moreover, ~ 50% oil in refining of India UTs in Automobile Industry Automobile the India ; availability include Chennai 315,317 overall FY2017 16,674 and BMW, stock and FDI of 85 2

2017 © The Smart Cube. All Rights Reserved. Note: Automotive SectorAutomotive to ~12% of India’s GDP AMP 2026 IncreaseAims to Contributionof . . (February Anant R&D to true To delivering competitive developing and “The Heavy Automotive as a Strategic Industry in India Strategic in a as Automotive Industry 1) industry holds The The ~ ― ― ― AMP 2026 AMP channelise 7 make % AMP The sector Further, output which success, and government 2006 government auto to government Industries G strong industry 5% India’s is a detailed roadmap for automotive industry for the next ten years in terms of size, contribution, competitiveness, etc. competitiveness, contribution, terms size, of years in ten the next for industry automotive for roadmap detailed a is 2026 the 2016) will a has new quality Geete, (up Automotive Industry Industry Automotive prime the the India be ‘Make components also its also from growth government’s product manufacturing GDP, is ~ auto energies 12% and benefited expected products contributor seeks Minister will has ~ designed 15% in and into of industry potential Public support categorised India’ to India’s development in this scale and to FY the to increased industry of 2016) a produce is the Enterprises of initiative GDP industry the also efforts expected up the and State its – globally Automotive Estimated Contribution to India’s(2006– to GDP Estimated Contribution the nation world – ‘Make needs the and auto attracts 70 . ” focus exports on of in a – million automotive additional . to in 2016 on grow 7% India’ large of improving units, Mission both to 65 initiative investments 12% and industry million vehicles the Plan generate by billion. Maruti industry investment sector employed and contributes 2026 create country’s contribute the “Our country’s 2026 jobs and 2016 as . vision ; Indian . around ” nearly the The a components Suzuki a In – – revenue has ‘sunrise GDP 26 Kenichi infrastructure directly the industry is in 7 Indian made Automotive Sector Overview . . (AMP 65 1 been automobile that India We % 32 last excess million of to sector’ (auto Ayukawa, to and over ~ currently (November 2026 million to by automobile $ 10 the 35 300 2026F 2026F) and 12% the additional – of indirectly industry) the years, the 40 1 – GDP billion ) % a manufacturing to 12 sector tune next people MD of contributes sector automobile % right make by 2016) its the industry want decade, & of of jobs by 2026 overall must now, CEO, total that the $ are the the 35 by to – 86

2017 © The Smart Cube. All Rights Reserved. Note: PassengerFY2016 in Exports Vehicle and Led Nissan Suzuki Maruti Hyundai, . . . . Automotive as a Strategic Industry in India Strategic in a as Automotive Industry slide note slide moto forover short transporting goodsareand distance) used and equipment workstrucks (notor handling lifting fitted with special 1) UK, The In volume) During In FY together automobile a commercial ― ― ― ― Comprises the following sub following the Comprises 8,960 2010 4.1% 2013 FY decline operating Meanwhile, Hyundai The However,Automotive total exportsdecreasedY- FY2017 in 5% by and continued currency devaluation in major markets in Latin America and Africa and America Latin in markets major in devaluation continuedcurrency and models FY - purpose vehicles (e.g., tow vehicles, cranes and firefighter trucks), chassis with engines, vehicle bodies, vehicle part vehicle bodies, trucks), (e.g., vehicle vehicles firefighter cranes with engines, and chassis tow vehicles, purpose Turkey, key 2017 2016, total FY export of controlled 2012 , and three in 6 number Italy, Hyundai, at vehicles 9,762 exports . 2011 3.2% India’s Automotive 9 Ford, almost % exports, – Maruti 2017, markets - and the wheeler of - Volkswagen categories: tractors, passenger vehicles (including those those for >10 race and (including tractors, vehic passengers vehicles passenger categories: ~ UAE ( full (together 2 vehicles 5 Maruti 53 Suzuki . two . 9 11,759 Automotive Exports Automotive 0 4.1% 2012 whereas %, % capacity %) of and segment of wheelers, respectively – India have Suzuki exported reported Nigeria the and accounting ; 1 this include Exports Exports shown the total 13,223 CAGR: CAGR: 8.3% 2013 ( 3.9% GM ($ million, 2010– ($ million, - and 32 has followed across Source: UN Comtrade Source: other a % exports also Y forced consistent Nissan the Y - – o - for o by ValueOverall Share Exports in and - % Share of Total Exports Total of Share % registered segments Y - two 13,887 Y) SAARC growth 2014 4.4% the by ~ (by and 86% were passenger companies domestic categories volume) 2 two 2016) decreased countries, share) (by strong the 13,531 wheeler 5.1% 2015 volume) top sales ; ; to growth vehicles, however, the – o- 3 sacrifice by Y on the backincrease onof the Y inflation in the passenger growth passenger segment segments 4 . 5 14,460 in 5.6% US, 2016 % Automotive Sector Overview accounted exports Y export the with - Mexico, o- Y ( share - 5 to vehicles vehicle reported their . volumes 8 by 3 automotive exports resultedin increase in exportsin motor of % (byvalue) because les), freight vehicles, vehicles, freight les), surged 6.9% Y- 6.9% surged ,478 of ‘MakeIndia’ in engines) s and accessories, accessories, and s Y vehicles initiative, which South launching for - Y fell production rcy During 2016, o - (fitted with - o ,268 cles; continued in in cles; continued exporters Y and chassisY - a ( from Y) Y a 16 majority - Africa, o witnessed units CAGR – . – - 2 Y 18.1% %) new 45.7% 45.7% 86% plants o and and the (by car - Y of in 87

2017 © The Smart Cube. All Rights Reserved. Note: Industry Growth Industry AMP 2026 and Other Policy Reformsto Support . . . Automobile . Faster . Ministry . . . . Automotive . National India’sPolicy Initiatives No. 3) 2) 1) 10 9 8 7 6 5 4 3 2 1 minimum It automobile The The and The expenditure The them In on The The which ~ During In Renault and Nissan jointly operate their Chennai manufacturing plant, and the capacity is equally divided between Renault and betweenRenault the divided plant, and capacity is jointly Nissan operateequally and manufacturing their Renault Chennai covered been the top have only FDI 10 of investments companies All currency conversions are at at are INR 1 = USD conversions currency All $ is 300 2005 2005 low Daimler Suzuki General Motors Ford Caparo Renault Continental Automotive FCC Isuzu Nissan Adoption also document hybrid government Government government ministry government of would Automotive -cost billion 2016– , , encouraging Heavy NATRiP to Policy Mission investment 3 vehicles Company or manufacturing 3 from 1 encourage be provided 2026 , and Major FDIsAutomotivein Sector automotive which also Industries at 2002 is invested was Source: Department of Industrial Policy and Promotion and Policy Industrial of Department Source: of – FY2015 ($ million, 150% also Plan Manufacturing , par Testing offering prescribes AMP India include R&D conditions) launched with offers support 2016– to R&D, allows 2026 $ in and components 200% and and global . 388 incentives the scaling 2026 steps exemption UK Netherlands Germany, Netherlands Japan Singapore, Japan Japan Germany Japan US Kong, Hong China, US Public it global R&D targets to 0.0149 5 to % 100 industry and increased for million of standards develop small (AMP to up Infrastructure Electric manufacturing 125% Country(s) Enterprises competency of sustain foreign FY2016) to exports ~ car in by 2026) from $ increase to centres 2 the ; weighted offering Hybrid , and the 000 175% and equity to project licensing deadline -wheeler two under 35– 2 improve development , Project the for of Vehicles respectively rebates investment 40% deduction automobiles testing, size to the and for establish of (NATRiP) manufacturing 116.7 169.2 389.0 477.6 973.9 979.5 56.8 72.5 72.5 95.2 of FAME FDI on (FAME) overall the approvals the manufacturers validation R&D through project on India automotive and 7 production expenditure India in-house testing automotive scheme is for automatic and competitiveness Scheme end Automotive Sector Overview centres, importing recorded $5.5 billion billion recorded $5.5 automobile industry R&D by -2017 R&D industry to – FY2015 During FY2016, Indian Indian FY2016, reducing in FDI inflow promote components infrastructure approval and which by or outsourced excise 3 manufacturing use will Ni . 5 (without ssan – 4 of also times in duty electric India, focus R&D any on to 88

2017 © The Smart Cube. All Rights Reserved. Million DirectJobsMillion by 2022 ~15 Generate to Expected Sector Automotive . . Outlook Labour MarketLabour Analysis workers generatessector The hugecontract share a directbothof indirect and has employment, also and availability of cheap labour favourable demand, domestic rising of back manufacturing investing the hubon environment and Employment in the Indian automotive sector is expected to continue rising, as it has emerged as a ― ― ― recognised national occupational standards." remain so in the future as well.incremental the meetTo human resource requirement in the sector, the entire ecosystem has been scalingtraining up its initiatives and have aligned themselvesindustry to The eachtwofor the In sectorFY2016, employedpeople 13 for eachtruck, each 6for for eachcar, 4 three these deemedare to be low as countries, Asian Southeast other and India to operations their shifting also are multinationals Various it is “The manufacturing sector is onethe leading of employers in the country and is expected to expected share . . of wheeler manufactured manufactured -wheeler accounting Auto The on ― contract to Auto Component Manufacturers Component Auto than This the stabilise automotive component is back OEMs workers primarily Indian Automotive Industry Industry Automotive Indian at for of Development Corporation (NSDC) (July 2015) (July Corporation (NSDC) Development 2013 11.0 ~ 4.8 4.8 1.9 1.5 cost manufacturing destinations manufacturing -cost 65% the ~ 50% in sector (in million, 2013, 2017F and and 2017F 2013, 2022F) (in million, due auto ‘Make manufacturing in of 2022 to component the is faster In Source: Ernst Young& expected – sector’s India’ Dilip Chenoy, Managing Director and CEO, National Skill National CEO,and Director Managing Chenoy, Dilip growth 2017F 12.8 6.0 3.1 2.0 1.7 Service Centers Service campaign manufacturing is total to rate expected – remain Direct Employment employment and higher the to rose 2022F 14.9 largest 7.3 7.3 2.2 2.0 OEM remain labour from Automotive Sector Overview 40% employer Dealerships elasticity the in 2008 largest of in wheeler, and 1 1 and -wheeler, to the the 56 employer, subsector % country in 2014; 89

2017 © The Smart Cube. All Rights Reserved. . Cars, Motorcyclesand Tractors in India Passenger of Manufacturer Largest Haryana, Key: Labour MarketLabour Analysis . . ― ― automotive sector employed the total manpower industry Maharashtra’s automotive Major Auto Component Manufacturers Component Auto Major Major Automobile OEMs Automobile Major ― ― Automotiveis akey industry in Karnataka and Vadodaraand automotive hubsSanand in statesmanufacturing of the key automotive Gujarat is locations manufacturing main the are Pune and Aurangabad Nagpur, Nasik, Benz Mercedes and Motors Tata Skoda, include state the in companies Key MAHARASTHRA include Toyota, Volvo and Tata Motors Tata and Volvo Toyota, include companies thekey state Some thein of Dharwad and Narasapura in located are clusters The employs 40% of of 40% employs GUJARAT in the country’sthe in emergingas one KARNATAKA GeographicalDistributionof Employment Automotivein Sector - with with Vadodara Sanand Alwar Dharwad Ludhiana Pune Pithampur Aurangabad Source: NSDC Source: Hosur Chennai Manesar Narasapura Pantnagar Jamshedpur . . ― ― 3 automotive hubs in Asia transformtop the area of the intoone stateThe government to aims ― ― ― tractors passengerof cars,motorcycles and manufacturingthe Haryanain leads Ashok Leyland Ashok and Renault Nissan, Ford, include companies thekey state Some thein of Chennai around located is cluster The Honda and Yamaha and Honda state include Maruti Suzuki, Hero companies Some the the key of in Gurugram and Manesar in based manufacturing are facilities Key two and cars passenger production of total the of ~50% for also accounts It Adityapur wheelers in India -wheelers Automotive Sector Overview . TAMILNADU HARYANA Adityapur and Jamshedpur in Jharkhandare located clustersThe in JHARKHAND 90

2017 © The Smart Cube. All Rights Reserved. SignificantSkill Gap Sectorin Automotive Skills Shortage in the Indian Automotive Industry Automotive Indian the Shortage in Skills . highly Though Lack of proper understanding understanding advanced of of Lack proper Limited skills related to civil engineering civil to related skills Limited skilled Inadequate training facility in auto auto in facility training Inadequate India engineering drawings/diagrams engineering workers component manufacturers component has and project management project and Skill Gap Areas in Auto OEM andAuto ComponentsSector abundant remains manpower a major concern to Source: NSDC Source: meet the automotive prevalent in automotive sector automotive sector in prevalent Controllers) Numerical Computerised complicated softwareas (such in programming skills Gaps handling for interpersonal skills interpersonal and multitasking negotiation, Insufficient sector's Automotive Sector Overview demand, shortage of 91

2017 © The Smart Cube. All Rights Reserved. Industry’sRequirementsSkilled for Manpower Meet to Unable System Educational Current Skills Shortage in the Indian Automotive Industry Automotive Indian the Shortage in Skills to manpower Industry’s “In India, approximately 0.4million engineering students graduate every year; however, only 20% of these graduates are readily employable. By 2020,labour gaps hurdle posed by an expected shortage of 13million medium- in Lack of Talent Pipeline Talent of Lack technical is requirement not met curriculum by industry India based employees complications their Absence of Centralised CertificationAgency institutions , EY (2014) Demographic , Dividend EY Promised Factors toLeading Skills Shortage of competency certifications does - recognised skilled due not in hiring have agency to levels and complicates ideal the Absence labourers ; - competency developing and any intensive industriesbig are likelya face to to wage this No Competency Wage Grid provide of skilled workers.” workers.” skilled training centralised, levels to leads the defined reflect the process - skill levels is Automotive Sector Overview career to of a standards key of of – of Reaping India’s Reaping India’s an hiring, challenge, an individual employee co planning - relating as to it 92

2017 © The Smart Cube. All Rights Reserved. Industry Members to Tackle Skill Gap Tackle Skill to Members Industry MultipleStepsBeing Taken by Governmentand Skills Shortage in the Indian Automotive Industry Automotive Indian the Shortage in Skills It aims to converge and monitor monitor and It aims to converge skill development schemes and and schemes development skill provide subsidised loans to to loans subsidised provide students for training for students Skill India Mission India Skill enhancement initiatives with government with bodies universities to run skill run universitiesto students partnership in Vocationaltraining to Collaboration with for employees Measures Taken Measures Gap Skill Address to Members Industry by Measures TakenMeasures Gap by Government to Address Skill - respect to to respectcompetency for levels National Skills Qualification Qualification Skills National framework and standards with with standards and framework various trades in the industry the in trades various It lays down the competency competency the down lays It Framework Framework and soft skills softand developing technical programs focussedon training facilitieswith Setting updedicated university curriculums funding forand various externship programs Investment in the NSDA to the NSDA the current enhance The government has appointed appointed has government The National SkillDevelopment Automotive Sector Overview institutional framework Agency (NSDA) (NSDA) Agency 93

2017 © The Smart Cube. All Rights Reserved. Dedicated ProfessionalQualification Trainings Skill DevelopmentAutomotive Council Provides Skills Shortage in the Indian Automotive Industry Automotive Indian the Shortage in Skills demand for skilled technicians and upskilling in the sector.” sector.” the in andupskilling technicians skilled for demand difficult to get properlydifficultget to trained people. This difference onlycan bridged be improving by quality the the of “Indiamanpower,rich isits in butopportunities and facilitiestrain and that gainfully employare by them manufacturing, sales and service, road transportation domains, covering all levelslower from opportunities." “There are encouraging signs MakeIndiathat in positively is impacting generationjobs. of Make Indiain haspotential theemerge forcemultiplier to asa provide to emerging the workforce new livelihoodwith to high economy, a largereconomy, disposable a incomeand lowering first- the “Tamil Nadu has technical539 training institutes and more than Industrial400 Training Institutes (ITI) institutes that churn out 150,000students every year, but it’s sad to see that the industry still finds it far, few.the otherOn hand, growth in the automotive industry, changing technology, a burgeoning “Automotive Skill Development Council offers qualifications across the value chain of R&D, R&D, of chain value qualifications the across offers Council Development Skill “Automotive - end technical and managerial skills.” training. – Chandrajit Banerjee “Our vision is that over the next decade, the Indian automobile sector must contribute million million additional jobs by 2026.“ in excess of 12%of the country's GDP. We (auto industry) want to create nearly 65 ” – P Amudha,P Labour Secretary – Mercedes ,General Director Manager, ConfederationIndian of Industry (CII) Council (ASDC) (May (May (ASDC) Council 2016) India (February 2016) – - , Maruti Suzuki (November 2016), Suzuki Maruti Sunil Chaturvedi, CEO, Automotive Skills Development Benz (August 2016)Benz (August – Kenichi Ayukawa Kenichi Tamil Nadu (September 2016) (September Nadu Tamil – Roland Folger, Managing Director and CEO, and CEO, Director Managing Folger, Roland hand life cycle of cars have triggeredhandofcycle life huge , Managingand Director CEO Automotive Sector Overview - hands skills hands skills – 94

2017 © The Smart Cube. All Rights Reserved. Note: centres manufacturing Toyota The industry of Commission building launched Global operations players automotive Liberalisation passenger the protection local commission's as Hindustan the passenger and venture Maruti Liberalisation Automotive Indian Post OEMs automotive costs, Introduction Introduction indigenisation 2) 1) Suzuki License Raj was an Indian system that required private players to obtain numerous licences from multiple agencies to to agencies set up from multiple licences numeroussystem to private that obtain players required Indian an Raj was License The timeline highlights keyThe highlights in timeline milestonesthe automotive industry; the subsidiaries that list companiesof established government objective company an manufacturers liberalisation Suzuki and ; OEMs of completely established abundance in ‘AMP to cars assembling from the cars Motors in Motor sector Hyundai to India India based and was industry Government ; plants set to assess 2026 began such foreign – however, recommendations, of ; formed delicensing Indian Automotive Industry Industry Automotive Indian Corporation make formed attracted was indigenous the the ’ up their in and expanded were of as the (in working comprises players 2015 automotive established plant on government cheap affordable set Ford, the feasibility 1991 assembly as assembly in of offered foreign a up of 1948 Tariff India joint with cars ), the the their R&D for GM, labour on the , > 35 and Indian OEMs and 2008 manufacturing Industry, Rapid Post Growth proximity automotive compared 1991 1981 1952 1942 –present – From InceptiontoPresent 1960s–1980s 1993 to with facilities industry 1944 1903 1985 many –2007 5 in 1982 emerging in grew India rapidly, (on collaboration (PAL) Premier and India’s working Fiat rolled Raj Nationalisation collaboration 1950 Samuel requirements government partially Auto foreign The automotive automobile operations Bosch manufacturers rapidly Automotive MarketAutomotive Scenario markets) 1 2 ’ the 1100 bus , automotive stalled components out collaboration first Green, as due and back PAL with was – deregulated, Automobiles in in India is is exhaustive not India in in its many ; industry steam to the Simpson India today, 1954 of Wabco entered with first a eased with and such and a business business a strong low British launched growth multinational - industry industry operated Indian Chrysler; the production production the norms as & Fiat, expanded and boost engineer licensing Co, ‘License into Gabriel, Limited Indian of car grew built was and the the car for in in in – a ; 96

2017 © The Smart Cube. All Rights Reserved. Automotive Market by 2020 by Market Automotive IndiaBecomeWorld’s Likelyto Third - . . . . Indian Automotive Industry Size Industry Automotive Indian car sales bygrowthThe 2017.comewill on the back of a fast India become In commercial However, income During In vehicles ― ― ― ― ― FY2007 30.5 o vehicle four 8 Various In Also, Over During weak started estimated 2015, recent availability,decreasing unemployment, increasingdisposable incomesconsumerand rising % 2016 In sales and “India will overtake Germanyto become the world’s fourth ; and -wheelers by January 2010 2015 of consumer in the India 2020, the this , financing catering AMP of leading years, in the sales 2015 and – to electric – third- Faster 2020 FY period, 2015 middle had grow 2013 passenger 2026), , ; of 2014 passenger India lack the interest players, their , electric largest were , India’s the , vehicles Adoption at the the , India government of class cost a had electric the sixth the 16% government adequate Indian vehicle expectations.” vehicles such FY2010 share by faced the advantages 43.3 industry key and vehicles - CAGR largest 2020 and vehicles as world’s inhibitors – in youth automotive production rising – FY2007 billion, Revenueby ($ Toyota, Source: India Brand Equity Foundation (IBEF) Foundation Equity Brand Source:India stood Manufacturing the over infrastructure and on launched automotive declined global inflation, to population the FY2011 second 2016– (cheap at the 58.6 – the BMW, 22 IHS Markit (November (November 2016) Markit IHS back is , passenger Indian manufacturers industry 000 expected 2020 the - largest labour) 18 high Maruti of (such of units National industry % to market various FY2012 Electric interest Y 34 66.3 - two to reported (a vehicle o as and Suzuki million - 37 reach Y -wheeler charging Electric CAGR: CAGR: 6.35% in . in growth Vehicles government 5 - rate have % growing economy, adequate financing the market and the 10 units Y strong - FY2013 - o and Mobility million world largest market indomestic FY2015) 67.6 Mahindra -Y increased stations) wake market in (FAME) growth), is economic middle Automotive MarketAutomotive Scenario expected ; growth units initiatives the of Mission (just and scheme & decreased - of industry FY2014 their class Mahindra, largest largest 55.2 slowdown, which on after difficulty to Plan population grow focus account (such to China), only (NEMMP) is encourage demand from expected have in as on FY2015 resulting 2 , 58.9 000 obtaining of Make which electric 2 already . rising 4 2020 were % the for to to in in is , 97

2017 © The Smart Cube. All Rights Reserved. Multiple Leading Liberalisation,PostIndia Has Attracted . . Number of Active 2016) Active of and VehicleNumber (1980 Manufacturers India in During market Domestic multinational set ― ― Vans VehiclesUtility M&HCV LCV Passenger Cars capacity units In In up Segment 2009 2014 entire per in 1980 2008 , , manufacturers, overall 5 Mercedes Volkswagen of annum 110 production – vehicle 2016 Source: IBEF Source: ,000 vehicle - , 81.8 36.4 52.9 42.9 52.8 Benz Market(%) Leader cars manufacturer established the 2016 units production India such 35 Indian started as a Vehicle Manufacturers Vehicle Maruti $ ; 768 automotive Commercial Vehicles while its Passenger Cars million production Suzuki, Source: IBEF Source: some 37.0 31.7 12.3 14.7 21.2 manufacturing Mahindra market of During the past 3decades, almost all major global vehicle manufacturersglobal vehiclemajor facility these establishedmanufacturing their Other KeyOther Players (%) in witnessed only & Pune, plant 13.6 9.3 plantsin India Mahindra had with in Pune, their Automotive MarketAutomotive Scenario 7.4 10.0 6.0 an the and installed with assembly entrance Tata an 9.9 5.6 annual capacity Motors, plants, of production of lead various others 10 ,000 the 98

2017 © The Smart Cube. All Rights Reserved. Note: Manufacturers Car Domestic All by Performance Strong . . Key Factors Expected toIndia Vehicle Drive in Manufacturing SizeIndustry Automobile Indian 2) 1) Sale domestic Over ― ― All currency conversions are at INR 1 INR at are USD = 0.0149 conversions currency All manufacturing component not doesand The is include revenueonly forproduction vehicle sales company’s Maruti In success the manufacturers Product innovation by foreignand domestic OEMs Growth investmentsin from of FY 2011– company passenger 2017 of Suzuki manufacturers Jaguar of , 2015 its M&HCV Tata FY2011 plans new reported Land 30.4 , and Motors’ Internal the products to and Rover commercial invest market LCV a revenue revenue Source: Society of Indian Automobile Manufacturers (SIAM) Manufacturers Automobile Indian of Society Source: vehicles ~ – FY2012 $ Ciaz, 35.7 2 – reported . 2 by Revenue vehicles billion stood of Baleno dropped ~ $ 10 in at robust and India increased billion $ FY2013 in 1 40 35.2 – FY2011 ($ billion, Vitara 2016 . to 2 2 growth billion buy in – from rising middle Demand forpassengercarssmall >15 year >15 VehicleScrappage Program(for Policiestoencourage FDI implementationGST of Taxreforms by virtue of 2017; FY Brezza by land 2017 2 7 % on (decline however, and FY2014 – and 14.3 ( 18 the - and old MHCVs) improve . 5 7 % . FY2015) reduced back of 8 % Y there External - 4 o- Y Automotive MarketAutomotive Scenario . 3 - its - Y of % o class populationclass - growth), was FY2015 dealership Y discounts Y 38.8 strong - respectively o- a Y) 13 as % mainly performance offer the Y network - o- Y demand in on due increase 2016 its to cars the for by in ; 99

2017 © The Smart Cube. All Rights Reserved. Note: Boosting Expansion Capacity and Investments New Malaysia Iran Indonesia Thailand Korea South India Japan China Country . . . Asian CountryRanking Vehicle India in Manufacturing Total financial year 2016 year financial 1) During Though and The in ‘Make the ― ― ― The numbers are slightly different from the ones mentioned in the graph as they have been measured for the calendar yea the calendar for measured been have they as the graph in mentioned the ones from different slightly are numbers The two coming Other made increase In The Two-wheelers the sector - 2013 in wheeler FY2012 20.4 FY growth range demonetisation 15.4 3.1 0.9 0.9 India’ 2012 significant vehicle also , years its Renault−Nissan of – production rate initiative benefited sales FY Production Volume products Passenger Vehicles Passenger manufacturers, 2017 (CAGR) investments : – Source: International Organisation of Motor Vehicle Manufacturers (OICA) Manufacturers Vehicle Motor of Organisation International Source: FY2013 , by Vehicle(Four 20.6 production Global Ranking Global 15.7 – (in 0.8 3.2 0.8 capacity from offered of along announced late passenger – 24 18 17 12 to the by Production Volume by Production 6 5 3 1 such - with 2016 Three-wheelers and expand presence volume as market the ) vehicles plans FY2014 caused Ford, - 21.5 wheelers) ProductionVolume 16.9 production 3.1 0.8 0.7 new increased share of to Volkswagen, and sectoral Commercial Vehicles a major invest temporary two Asian Ranking Asian capacity - global $ wheelers at (million units, FY2012(million policy FY2015 2 23.4 . 18.5 4 3 2 1 8 7 6 5 5 a 0.9 0.7 GM, 3.2 4 billion . OEMs 3 decline – Honda, % stood is CAGR, (over expected that at in Automotive MarketAutomotive Scenario Toyota (2016) 3 primarily FY2016 a growth, increased . 24.0 18.8 6 3.4 0.9 0.8 5 % - Production (units) Production year to – and and FY2017) boost 28,118,794 4,448,965 4,228,509 9,204,590 1,164,710 1,177,389 1,944,417 5 the 513,445 period) Hyundai, driven . r 2016 and not r 2016 not and 3 competitiveness % government’s , production respectively FY2017 by in 25.2 19.9 1 have 0.8 0.8 3.7 Source: SIAM Source: India growth also to in 100

2017 © The Smart Cube. All Rights Reserved. Growth During DomesticVehicle Sales Recorded Robust . . . AutomobileDomesticSales Trends Total sentiment, In Incentives for Buying Eco Government Initiatives – Though demand During of lower FY Two-and Three-Wheelers Two-and Implementation of LCVs, friendly Carsfriendly and Scrappage Policy 2017 FY2012 diesel 17.4 FY 0.8 2.6 sales 14 from the , 2012 lower domestic Key Factors Expected to Drive Market GrowthShortin prices segment of middle – FY commercial financing 2017 class, sales FY2013 17.8 bounced , 14.3 Passenger Cars 0.8 2.7 - sale costs growing surged Expanding Middle Class Driving StrongDriving Class Middle Expanding FY2012 vehicles of Demand forPassenger Vehicles passenger and ‘Make in India’ Program toDrive back – by VehicleType ~ youth new 7 declined FY2014 % in Commercial Vehicles 18.4 15.3 0.6 2.5 FY model on population, Investment cars 2016 –2017 a (during like and launches on - (million units, FY2012(million on two account FY2015 - lower FY like 16.5 19.7 0.6 2.6 wheelers 2012 basis fuel of – FY growth costs driven 2015 increased – Medium Term Automotive MarketAutomotive Scenario FY2016 AreastoRevive Rural ) and Schemes forSchemes Rural 20.5 0.7 2.8 17 due – in by Government’s FY2017) excise industrial Demand on to a positive slowdown the duty back FY2017 activity cuts 17.7 3.0 21.4 consumer Source: SIAM Source: 0 of … in rise sales and in 101

2017 © The Smart Cube. All Rights Reserved. Note: Components from Other Asian Countries Asian Other from Components Automotive Imports Primarily India . . . Number of Vehicles per 1,000 Inhabitants (2015) VehiclesInhabitants of Number 1,000 per India’s Imports Automotive works trucks (not fitted with lifting or handling equipment and are used for transporting goods over short distances) and motforover shorttransporting goods areand distances) used and equipment workstrucks (notor handling lifting fitted with special 1) Comprises the following subcategories: tractors, passenger vehicles (including those for >10 passengers and race vehicl and for >10those passengers (including vehicles tractors, passenger subcategories: the following Comprises 1 During ownership Currently, During CAGR companies ― ― ,000 3,493 2010 22 - purpose vehicles (e.g., tow vehicles, cranes and firefighter trucks), chassis with engines, vehicle bodies, vehicle part vehicle bodies, trucks), (e.g., vehicle vehicles firefighter cranes with engines, and chassis tow vehicles, purpose China, Automotive manufactured inhabitants of 2010– 2016– 118 87 209 Germany, ~ India rate to 3 %; 2016 2040 import 234 4,438 2011 remained components, components has in , , India, South automotive passenger 228 parts the Source: International Organisation of Motor Vehicle Manufacturers (OICA) Manufacturers Vehicle Motor of Organisation International Source: Number of Vehicles per India’s Automotive accounted 1,000 Inhabitants1,000 – Korea constant lowest by Value rather Country (2015) Country 4,397 2012 mainly are car and ($ million, %, 2010– %, million, ($ imports 439 vehicle than at ownership for exempted Japan ($ million, 2010 22 the electronics manufacture Source: UN Comtrade Source: (primarily vehicles were largest ownership 4,021 2013 – 1 by by Imports Imports the in from 417 share India per key and comprising – 2016) indigenously approvals 1 2016) exporters rate of ,000 – is engineering by Value imports expected 4,154 2014 in inhabitants 609 Asia automobile of and automotive to Pacific Automotive MarketAutomotive Scenario enhancements licencing, grow 4,355 2015 ; components) over 775% components es), freight vehicles, vehicles, freight es), s and accessories, accessories, and s thus 2014 orc to ycles Japan South Korea Malaysia Thailand UAE Saudi Arabia China Indonesia India that 175 4,164 2016 encouraging – 2015 to grew cars are India , at per the not a 102

2017 © The Smart Cube. All Rights Reserved. Note: Cars Segment Cars Passenger Indian Dominates Suzuki Maruti 100% = 586,664 units 586,664 = 100% 100% = 2,025,479 units 2,025,479 = 100% Utility VehiclesUtility Passenger Car 1) Passenger carsvans utility are and vehicles includes also sub segments which passengerof vehicles 9.3% 9.9% 21.2% 5.6% 25.4% 13.6% 11.1% Source: SIAM Source: Source: SIAM Source: 1 1 Sales in India India in Sales Sales in India India in Sales 14.7% 36.4% 52.8% – – by Brand by Brand Others Hyundai Toyota Suzuki Maruti Mahindra& Mahindra (FY2016) (FY2016) Others Tata Motors Honda Hyundai Suzuki Maruti . . . . Dzire, India top 7 52 vehicle Maruti vehicles ― The during reported company’s vehicles Mahindra post ― ― Maruti . segment In 8 The utility Bolero KUV % 10 FY company strong till Wagon in 2016 100 segment FY new and best Suzuki vehicle date passenger a 2015 models grew is segment & 7 , Automotive MarketAutomotive Scenario growth 81. - % the models ; selling utility R Mahindra the launched these – Y and 8 9 FY - company’s with % . o leads 6 - 2016 % featured company’s Y in ; Swift cars, include Y growth passenger include vans vehicles - a o- in , market the leads Y 9 which 14 (by new FY passenger . 7 among (by TUV 2016 % Alto, volume) passenger best the helped share in products segment volume) 300 cars utility , - Swift selling utility the car and the of in it 103

2017 © The Smart Cube. All Rights Reserved. Tata Tata Commercial Vehicles Segment Vehicles Commercial 100% = 383,331 units 383,331 = 100% units 302,373 = 100% Light Commercial LightCommercial Vehicles (LCV) Sales in India India in Sales Vehicles (M&HCV) Commercial Heavy And Medium 31.7% 7.4% 10.0% Motor, Market Market Motor, 37.0% 12.7% Source: SIAM Source: Source: SIAM Source: 5.4% 42.9% 52.9% Others Leyland Ashok Tata Motors Mahindra& Mahindra Others Eicher Leyland Ashok Tata Motors Leader in Overall Overall in Leader – by Brand . . . . (FY2016) segment Tata Ashok M&HCV in ― ― ― in tough this Though market segment overtook In ― ― ― demand infrastructure It segment segment In In FY its new comeback managed Mint The The FY Though and model, 2016 Motors FY segment 2015– FY FY Leyland market also – competition 2016, segment company’s robust launches 2016 2016 of leader company by Brand Tata for grew grew to helped ( M&HCV the FY 4 Automotive MarketAutomotive Scenario Tata to , , its become benefited 2016 share pps in Motors leads also (through overall sales, increase at 48 Mahindra the the higher – the it spend, . 24. , 7 Ace Motors strong Y (FY2016) dominate is reported % - over led 5 o especially company’s company’s the segment the Y - category % - the was Mega tonnage trying - Y its o- Y its to -o FY growth) Y product from market category’s goods which the (by -Y company a model 2012– & in and the strong 22% (by to volume) shrunk vehicles of through pioneer Mahindra segment Super the volume) share growing M&HCV M&HCV make portfolio its FY carrier decline in – raised sales 2016 Ace), Jeeto new over the LCV Ace still its in a 104

2017 © The Smart Cube. All Rights Reserved. Note: Sales in Automotive Industry Automotive in Sales ~50% Contributes Manufacturing Components . . . . . Automotive ComponentsManufacturing Segment 1) billion, semi Automotive During Over According independent Component their 72% ― ― ― All currency conversions are at at are INR 1 = USD conversions currency All manufactures In establish In Gurugram, Most FY2012 - is May local the skilled August 30.6 supplied driven FY large last 2015 2016 capabilities to an workforce components Pune manufacturers manufacturers the component 2015 few automotive , by – ArcelorMittal diesel to FY ACMA, a years, , and 2021 domestic rise Bosch systems Chennai) by , in FY2013 OEMs 28% the steel opening manufacturers account 32.4 vehicle invested have According to the ACMA, engine parts (31%), (31%), parts to ACMA, the engine According signed manufacturers and transmission and steering parts steering (19%) and parts transmission and comprise components 0.0149 of manufacturing involved plants the are the major contributors to the contributors major the are automotive component industry componentautomotive for new demand, a $ total joint 50 ~ in 50% plants . both 9 in multiple venture components Source: ACMA Source: industry component million of cost facility FY2014 CAGR: 5.7% subsidiaries the 31.7 advantage, locations 1 agreement – overall in to by Revenue is India expected build production manufacturing sales across of with and a global of plant 1 to key FY2015 – FY2012 ($ billion, Steel availability the 35.2 is grow automotive exported, near Indian Automotive MarketAutomotive Scenario automotive Authority have at Bengaluru continuously a automotive of ~ while low 24% clusters of India - companies cost FY2016) CAGR FY2016 the that 38.3 in Ltd skilled industry remaining expanded India . primarily to (SAIL) $ (e 115 and and . g to . 105 ,

2017 © The Smart Cube. All Rights Reserved. Note: AUTOMOTIVE INDUSTRYDRIVERS INHIBITORS AND Cost Advantage Advantage Cost StrongInitiatives by Government and Overall Key Market Drivers and InhibitorsKeyMarket and Drivers 1) All currency conversions are at at are INR 1 = USD conversions currency All Inhibitors Drivers Strong High Shortage emission in Low corruption Lack roughly High Suzuki Attractively Lower efficient boost Various Tax Attractive Significant offers Asia, per reforms corporate of fuel domestic labour all and which emission the adequate capita government standards of the price offers Hyundai investment same skilled priced and required and also income tax manufacturing – and when standards production GST despite translates workers rate, infrastructure by fuel – discounts initiatives offer 2020 facilities ( implementation $ crude - in especially efficient 1 0.0149 ,598 Driving Market 75 capacity great , which to – % costs was in and by poor for Indian (such fall value 2015 (roads, and manufacturers on $ will component compared raise 106 expansion in car foreign as ) small global for lead government – likely per penetration rural ‘Make India railways, money to barrel passenger business oil with income, to a by manufacturing has in rise make prices during to domestic India’ developed one electricity, in middle ( is 20 entities thus vehicle ; of tax planning cars periods cars and retail the driving collection class and – per ‘AMP economies lowest prices Growth fuel etc especially of global 1 to . ,000 demand ) low 2026 prices and Automotive MarketAutomotive Scenario per implement transparent demand inhabitants) OEMs, ’) capita high from expected in India level as income Maruti BS India and are - to of VI Supply Demand Side Demand Side Supply 106

2017 © The Smart Cube. All Rights Reserved. Gurugram, Chennai and and Chennai Gurugram, Hubs (near Mumbai)(near . . Key Clusters andMajor Automotive Companies (near Delhi)(near (near Delhi (near ( (metro city) metro city) Bengaluru Gurugram Manesar Location centres investors India’s give Automotive Chennai Chennai Pune easy poor ) access Components Production Components that hubs infrastructure require to are railway usually a extensive stations – located KeyAutomotive Clusters – especially and highway Sanand near Manesar ports Bengaluru roads Vehicle Manufacturing Pune Gurugram Chennai large network Faridabad Pithampur Manufacturers and Pune, Key Key Pune, cities Noida power Pantnagar that with by State by Kolkata can access – is effortlessly a to cause Automotive MarketAutomotive Scenario key Automotive Automotive Components Production Components VehiclesBoth and national of connect concern roads key for industrial that foreign can 107

2017 © The Smart Cube. All Rights Reserved. Note: Manufacturer Maruti . . Key Products Locations Manufacturing (FY2016) Headcount FY2017) ( Decision Process Procurement Partner Client and India Year Parent Revenue Company Profiles $ 1) All currency conversions are at are conversions currency 1) All In FY2016, Maruti Maruti Suzuki continuedIn FY2016, todominate Indian the passenger car marketshare 52.8% with undertaken initiatives for water and energy conservation, wastemanagement, etc. carbon footprintits manufacturing across also facilities,productshas it supply and chain; company,The in partnership with suppliers,its undertaken alsohas various initiatives tominimise million, million, of Set Company Network 1 - up in up in Maruti Suzuki Maruti Suzuki, India’s India’s Suzuki, – ...... 13,259 9 . . . . 1981 Suzuki ,969. Vehicle Manufacturers company’s Multi Passenger Hansalpur, Manesar, Gurugram, ~ across Suppliers Also format operates Primarily Multi ‘Zero 86% INR 1 = USD USD 0.0149 1= INR (established 5 (permanent) Motor operates - - defect utility purpose of 770 for Maruti Haryana have 1 sells cars its Gujarat manufacturing cities , Haryana 947 Corporation Vehicles policy’ premium Vehicles a to as vehicles vehicle in network Suzuki’s ; comply a 10,626 India and JV (MUVs) of cars) (MPVs) ‘Green (Japan sale in Suzuki Leading Passenger Car Car Passenger Leading suppliers (temporary) of with facilities Asia used points, - Procurement’ Maruti based) Motor and cars (by of South Suzuki’s Corporation value) – which True America; located Value rigorous 127 Automotive MarketAutomotive Scenario and are – within with in Government quality for India, 1 NEXA 100 , 007 checks, the km sales (dealership of company radius India) such points as of 108

2017 © The Smart Cube. All Rights Reserved. Note: Exporter Hyundai Motor (2015) Headcount ( Revenue Decision Process Procurement Partner Client and Key Products Locations Manufacturing India Year Parent . . Company Profiles $ 1) All currency conversions are at are conversions currency 1) All million, 2015) million, In 2016, the companythe share the totalIn 2016, of held ~17.5%vehiclesmanufactured in countrythe Hyundai MotorIndia’sIndia is leading carexporter and second of Set Company Network 1 - up in up in Hyundai Motor India Hyundai Motor – ~ 5 ...... 1998 Hyundai . . 9 ,171 Vehicle Manufacturers ― ,500 all products It manufacturers, The these Operates Australia Exports Utility Passenger An 2 Launched Most the 2014 suppliers plants INR 1 = USD USD 0.0149 1= INR also their R&D Of components seats, remaining o , offered suppliers company Motor 34% Vehicles , 119 has products facility its in Indian car seat maker Dymos is the solo supplier of seats to the company the to seats of supplier solo the is Dymos maker seat car Indian and a digital body Cars Chennai India, India’s 42 of supplier network vehicles (South the customers the were in 66% such which parts located automotive Middle provides Hyderabad company’s Korean ( rating Korea 1 of to as was and each maintain 475 mufflers, 86 in a East supplied - suppliers AC virtual countries based) systems dealers proximity for Supplier s, experience supplies vehicles while steel the experience and of through to same wheels, across components to the came estimate and > Quality Leading Car Car Leading 1 its outlets ,226 level remaining - engines) largestcar manufacturer batteries, Asia manufacturing directly a of service total of cars the called Pacific, Certification such performance Automotive MarketAutomotive Scenario through overall 77 from of accelerators as centres ‘Unity 119 were engine Africa, Hyundai base quality Korean 3 Indian D Hyundai in parts, and to screens South the and in Motor of reliability Chennai suppliers auto country and alternators headlamps, ’ suppliers’ America, in , Indian 2016; while part ; of in in 109

2017 © The Smart Cube. All Rights Reserved. Note: Vehicle and Manufacturer LCV and Vehicle Mahindra & Revenue Decision Process Procurement (FY2016) Headcount FY2016) ($ million, Key Products Locations Manufacturing India Year Parent Partner Client and . . Company Profiles 1) All currency conversions are at at are INR 1 = USD conversions currency All such SAARC segments The ― ― of Set Company company’s respectively Bangladesh Overall, In Network as 1 forms - South FY up in up in Mahindra & Mahindra &Mahindra 2016 with it its Africa was , shares key – . . 20,122 652...... 1945 The ...... and the key Vehicle Manufacturers ― the company Strategy’ The Operates Sport Igatpuri, Kandivali, Zaheerabad, Haridwar, Nasik, Chakan, Two Passenger Tractors Electric Commercial In cutting market Mahindra 4 and Bhutan company October (established export third of (Automotive The through Mahindra, India’s - wheelers (permanent) company Utility 36. Chile Maharashtra down -largest Cars company Maharashtra ; Maharashtra continues 4 a after Maharashtra Uttarakhand 0.0149 it market %, Vehicles network 2014 capacity recorded Group Vehicles Vehicle also Telangana 40. on vehicle integrating as centralised , 9 Segment) the works reported ; ; % decided a 19,176 the to planning steel and (SUVs) of number 29 manufacturer be 1 company closely % ,167 42. trading India, (temporary) a to Y its 9 -o and 5 %, its offices of reduce % -Y two with suppliers respectively, where -term long and growth procurement company) is - wheeler in its currently in 20 supplier India key India % it in led from Y contracts suppliers with -o Leading Utility exports and -Y in the focussing base 650 a FY growth process share truck utility 2016 Automotive MarketAutomotive Scenario to to by volume 450 minimise of 10% business in vehicle, on ~ under South 8 . emerging 3 every to % Sri supply Africa tractor into ‘One year Lanka, the markets constraints and till Sourcing and parent Nepal, 2019 Chile, LCV – 110 ,

2017 © The Smart Cube. All Rights Reserved. Note: Tata Tata Manufacturer Revenue Decision Process Procurement (2016) Headcount FY2017) ( Partner Client and Key Products Locations India Year Parent . . Company Profiles $ 1) industrygrew Y 8% Tata FY2016, In Motors recorded Y- moderate a 1.5% the small commercialthe small vehicle segment,the company accounted forshare ~85% companyThe dominated the overall commercialvehicle market segmentwith a46.4% share; in million, million, All currency conversions are at at are INR 1 = USD conversions currency All of Set Company Network 1 Motors, India’s - up in up in Tata MotorsTata – . . . . . 26,569 40,207 . . . . 1945 Tata Vehicle Manufacturers - ― laid multinationals Proces The All Group, Sources franchise network Its Europe Also South Operates Commercial Passenger and 20 and o - Group Y,leading ppsto decline a 1in the company’s overall share to13.1% manufacturing the Jaguar integrates It down Indonesia service (permanent) runs company has s’ Korea, suppliers Sona parts (SQIP) of deployed sales a 20 0.0149 by C Land huge 19 contact ars Vehicles the R&D, all Thailand, Group from – national dealers to has the Bosch, have sales company Rover ; ensure facilities the 26,594 and company’s points leading incorporated Largest Automobile Automobile Largest and largest to and Continental, sales design business Senegal, comply the (temporary) to distribution TVS across Indian customer quality reduce companies, dealerships and Group with o Ukraine, has the - Y growth, while the Indian automotive the growth, while Y a manufacturing auto Delphi of production 16 relations a globe ; presence network outsourced stringent other - and step component 73 Morocco, and – offices importers, 7 management ‘Supplier large Denso in defects in in quality Automotive MarketAutomotive Scenario India India components sites in ~ suppliers the 170 South suppliers , 53 across and comprising country assurance Quality countries system exporters Africa, the , Asia, include such rest Improvement in program Bangladesh 3 India through Africa and in , as 887 the leading , Anand 2 which sales , 674 and UK, me a 111

2017 © The Smart Cube. All Rights Reserved. Note: Globally Company Forging Leading Forge, Bharat (FY2016), Headcount ( Key Products Locations India Year Parent Network PartnerClient and Revenue Decision Process Procurement . Company Profiles $ 2) 1) million, FY2016) million, wide Bharat All currency conversions are at at are INR 1 = USD conversions currency All Listis indicativecompanies of of Set Company range 2 Forge - up in up in of – critical India’s – Bharat Forge Component ManufacturersComponent Kalyani 4 1 . . . 1961 ...... ,763 ,194. and C Satara Pune Front Europe Also Transmission Steering Connecting allows procurement The largest ar (permanent) 3 safety Crankshaft company Group serves A the xle 0.0149 and exporter K nuckles parts B company R Asia eam ods the P has costs arts for ; Pacific 2 markets and introduced ,761 the to and manufacturer widen automotive (temporary) cycle of its e North - time sourcing vendor industrial ; of America, e - auto sourcing base to reduce sector components Automotive MarketAutomotive Scenario Brazil, also its Key Clients – manufactures 1 a 112

2017 © The Smart Cube. All Rights Reserved. Note: Development Application Centres Application Development Manufacturing 15 India, Bosch . . (FY2016) Headcount ( Key Products Locations India Year Parent Decision Process Procurement Network PartnerClient and Revenue Company Profiles $ 2) 1) sectors mobility Besides Bosch caterssolutions, to the industrial technology, consumer goods and energy Steering India ETASAppliances,ElectricalDrives India,Home BSH AutomotiveIndia and Robert Automotive Bosch India, EngineeringBosch and BusinessAutomotive Solutions,Bosch ElectronicsIndia, Bosch Bosch India operates through 9 SystemsBosch, BoschChassis companies: India, Bosch Rexroth million, FY2016) million, All currency conversions are at at are INR 1 = USD conversions currency All Listis indicativecompanies of of Set Company 2 - up in up in 1 – Bosch India Bosch Component ManufacturersComponent Bosch 9 1 . 1951 ...... ,134 ,768 ― ― ― ― ― ― ― ― the Bosch development Health The Has Automotive Automotive Car Electrical Chassis Diesel Gasoline regulations It also (permanent) important Multimedia Verna Nashik Naganathapura Jaipur Gangaikondan Chennai Bidai Bangalore Group sales company S India requires a 0.0149 ystems S nd ystems S Drives presence ystems (Germany Safety and S E operates teering lectronics application manufacturing has Accesories labour contractors ; C 2 ontrol (EHS) ,625 in laid - based) ~ 15 150 laws (temporary) requirements down manufacturing centres countries to sites comply strict are in : for India Environmental, with Facilities its sites, ; suppliers statutory some Automotive MarketAutomotive Scenario and of 7 Key Clients and 7 1 113

2017 © The Smart Cube. All Rights Reserved. Note: India Spark Minda, Manufacturing26 Plants Across Locations India Year (FY2016) Headcount ( Key Products Parent Revenue Decision Process Procurement Network PartnerClient and . Company Profiles $ 2) 1) million, FY2016) million, Spark Mindastrategicintoentered alliances and assimilatetechnologies latest required internationalthe meet and standards All currency conversions are at at are INR 1 = USD conversions currency All Listis indicativecompanies of of Set Company 2 - up in up in 1 – Spark Minda Spark Component ManufacturersComponent . 1958 Ashok 1 368...... ,202 ― ― ― ― ― The some various striker, automate It process rationalise The Serves rollup Aftermarket consoles, Interiors temperature clocks, Instrument Driver mechanical Safety, 9 also (permanent) Minda Pantnagar Minda Minda Minda New Minda Minda company company of relays various door 0.0149 Security adopted foreign and Delhi these tank Information parcel and Stoneridge System Silca VAST Furukawa Group Corporation : reduce handles, security and cluster, fixed sensors Gear integrate include has units global Engineering has entities Access ; and shelf, filters the 14,000 : 26 raw introduced Injection costs, Electric shift Restraint Instruments and etc SAP systems, dashboard OEMs and air : Systems manufacturing collaborated collaborated to the material Noida, . and (total) vent, position enter : Ariba locks, Greater : gauges, procurement centralise Bawal, and : moulding, System air Pune s immobili Pune, Telematics new various : sourcing inventory has wiper Pune duct sensors assemblies, with leadingwith international companies to Noida Chennai, and markets formed speed Aurangabad : plants and and Electronic Manesar blades, procurement measures ers, process solution dashboard, Chennai arm Noida in JVs sensors, System latches, Automotive MarketAutomotive Scenario digital rests India auto with and and and to to ; : Key Clients 114

2017 © The Smart Cube. All Rights Reserved. Note: Indigenisation of Cars MarutiSuzuki,Continuous Efforts Towards Success 1) 1) Financial toby 250 end of FY2016. With regard to long- momentum. areWe focussed network on and product expansion. outlets.hasfastest been NEXA the- We planexpand“We company’sto(thenumber the NEXA of premium dealership network) outlets Stories year ends in March of of every year in March year ends – Vehicle Manufacturers ...... December commenced JVand Suzuki MotorCorporationOctoberIn1982, Japan entered (SMC) intolicen a ― companythe of sites The company been workinghas also on ― segment (~53%share) companythe In 2016, continued ― across India workshops 3,000 and showrooms 1,750 units), million 1.75 of capacity annual 2016 of As ― 2013 in eventuallyand to 56.2% 26%) original (from the Suzuki MotorCorporation increasedstake its company the in 2007in to50% ― Hybrid Vehiclesby Suzuki’ (SHVS) dearer however,to3%, increased the rate GST hybridthe on vehicles ’Smart the made benefit to customers,the passenger its vehiclesby by of up prices slashing the GST the companythe on passed introduction After 2017, the July in GST of of ~86% 2016, (Marketing &Sales),Maruti SuzukiIndia manufactured goods manufactured ~50% by2020 ~50% Further,the company’s first launch 2017 of itunits; 123,850 another exported and India in million vehicles sold ~1.3 company The million ~2.6 company with the provided Gujarat of the state government 2012, In institutions financial Indian to share complete the G In2007, May cars to Hungary exportedit500 its first lot of 1987, In agreement Maruti with Udyog toform Maruti Suzuki; companythe 1 1983 aims for aims for , the company, hadmanufacturing 3 facilities(with acombined operations its sq m sq growing retail networkworld,the in andwillcontinue we this supplier base (by value) was located(by value) waswithin base supplier a total sales target of ~2 million units and market share target of of target share million units market and ~2 total a target sales of of land to build its 3rd manufacturing facility manufacturing 3rd its build to land of overnment of India, the other major shareholder, sold sold its shareholder, major other the India, of overnment term plan, by 2020,we are planning to set up NEXA~400 in 1983 and launched its first its launched and car 1983 in to dominate dominate to (February 2017) the the ” – R.S. Kalsi, MSI Executive Director Executive MSI Kalsi, R.S. – indigeni Ignis Ignis the Indian the passenger car Automotive MarketAutomotive Scenario – utilises utilises s ation its cars;of of as – 98.5% locally Maruti 800 Maruti a 100 km radiuskm 100 – in in c e 115

2017 © The Smart Cube. All Rights Reserved. Note: Highest by Any International Manufacturer International Any by Highest Renault KWID AchievedLocalisation 98%Level, Success Together with ourproduct portfolio expansion strategy,reinforced asis strengthening by KWIDportfolio, the SAARCand African countries, takingexcellence the Indian of manufacturing and engineeringworld.the to 1 clear strategyenhance to customer brand experience,several with unique and pioneering initiatives already ) All currency conversions are at are conversions currency All we are alsoarewe significantly increasing our sales and network reachIndia. in These effortsmatchedare by a fastest- underwayensure customersto that have anunparalleled experienceRenault the with brand. Stories Our roadmap“Our India for veryisclear, andhave longwe a - “Today, Renaultbiggestthe one KWIDis of ‘Make India’in success growingautomotive brandsIndia. in Renault has already RenaultexportsKWIDto started of the Sumit Sawhney Sawhney – Vehicle Manufacturers . . . . ― ― Renault enteredIndian automotivemarket the 2005 in lineup toits customers in the form of price reductions of up toproducton its 7% implementation India,RenaultAfterin the GST extended benefits of GST the KWID by companythe registeringY ~145% Renault’s India markettheir becamefastest carthe units of were year a within sold of the companyIn 2015, launched KWIDcar in the small segment; over 110,000 ― ― INR 1 = INR , Country CEO and MD, Renault,and Country IndiaMD, CEO Operations , Country CEO and MD, Renault,and Country IndiaMD, CEO Operations in India’ India’ in the of story success a became and India) in manufacturer international an by achieved (highest ever KWID with localisation 98% of levels achieved Renault and production into entered Renault 2007, In compact compact Duster and During 2011– cars 400,000 of capacity annual with an Chennai in facility manufacturing In 2010, the model USD 0.0149 mission the Renault SUV – which helped the company increase its market share to 23% in the in to 23% share its market increase company the helped which 2012, Renault launched 2012, various cars Pulse suchScala, asFluence, segment sale – of Logan in Logan of Nissan alliance established its $674.1 million $674.1 its established alliance a 49:51 JV withJV Mahindra &Mahindra for 49:51 India; the JV ended in 2010 after the failure of of theafter failure India; the JV ended in2010 - o - Y sales growthsales primarilyY driven in 2016, term commitmentthis market. to its - growing business globally growing business launch (December 2016)(December stories Automotive MarketAutomotive Scenario (December 2016) (December and one of the ofand one 1 ” – Sumit , with , with ‘Make ” – 116

2017 © The Smart Cube. All Rights Reserved. Note: HarnessesIndia in Market MSSL, Success 2) 2) 1) through these acquisitionsstrong with infloworders of and technology. foreign assetsfailure onaround turn them to simple or management failures. Mothersonjust has made not its foreignits subsidiaries sustainable,uniquehas a it but abilitystrengthen to bondsglobal with carmakers All currency conversions are at are conversions currency All of every year in March year ends Financial customers suggest.acquiringcase ofa not Its an overseasjust asset, butanopportunityserve toour We saw “We opportunityrecession, in and Visiocorp made ustrulyglobal. We always acquire whatour Stories “Motherson has clearbeen a exception across allplayers. Many companies have sold their – Component ManufacturersComponent customers better...... CAGR from $1.5 billion from $1.5 CAGR ― tolatestaccess technologiesin The company enteredalso into several JVswith global companiesto gain ― manufacturing facilities companythe 2016,of countries had presence 25124As in with ― ― ― toexpand presencemarket; its the acquisitions in the global of some companyThe several made the in lastdecade objective an with acquisitions ― Group,India,entered intoa WiringSumitomo Systems,1986,In Japan, and Samvardhana Motherson – FY2009 During cuttingand precision toolsmetal machining The company’s product portfolio includes wiring rearharnesses, (MSSL) INR 1 = INR manufacturer of plastic products) plastic of manufacturer -based Singapore Pigment (a Nippon and systems) climate cab of manufacturer US (a Bergstrom company), equipment electrical Japanese thecompanyJVs with had players such 2016, of 24 As as Nissin Electric(a o Motors,Mahindra, Volkswagen,Mahindra & Porsche, BMW and Mercedes -Benz clientits of Some Visiocorp Peguform Stoneridge accountsalso for it share; market ~65% with segment harnesses wiring car passenger theIndian in leader is a company The car market rear -view USD Leader of Passenger Passenger of Car Leader Wiring Oversea 0.0149 IHS Automotive IHS Automotive ” – – – – A A German auto component manufacturer (2011) manufacturer component auto German A V.C. Sehgal, V.C. s 2015 A US A UK clients account for ~85% of the company’s company’s revenue the of ~85% clients account for -based rear s based wiring harness manufacturer (2014) manufacturer harness wiring -based 1 include Maruti Suzuki, Hyundai India, Renault Nissan, Tata Nissan, Renault India, Hyundai Suzuki, Maruti include , the company’sthe , consolidated revenue grew at~34% 2 across to $5.7 billion to $5.7 Chairman, (November 2015) JV toJV view manufacturer (2009) -view Asia Pacific,Asia EMEA and the the formMotherson Sumi SystemsLimited auto componentmarket MSSL MSSL (November 2015) ” – a G 53% share in the Indian passenger passenger the Indian in share 53% aurav Vangaal,Senior Analyst, Automotive MarketAutomotive Scenario the the based designer and and designer -based Americas - view mirrors, include 117

2017 © The Smart Cube. All Rights Reserved. Strengthen Bilateral Commercial Relations Commercial Bilateral Strengthen Indian and Romanian Diplomats Seek to . . . . . Bilateral DiplomaticCommercialand RelationsBetween Romaniaand India outsourcing, relations Indian level Establishing Indian Currently, Romania together bilateral tradeinvestment and entrepreneurs and byRomanian bringing Indianand businessmen India the May In 2017, In embassy ― ― ― March acting the IRBF Wipro, equipment, Companies, Altantia, of large IT, companies, will FDIs as level Genpact, pharma 2013 and across presence Saira a also Indian from clearing an infrastructure have in , especially India serve the Seats Extended 1957 MNCs and the SunPharma, a made however, Ministers house of established wide as and former BPO - Romania ForumBusiness (IRBF) launchedwas as an initiative toboost with Romanian a investments those Simest focal of Partnership; companies and variety presence information of have Ranbaxy, point involved agriculture Foreign diplomatic countries a of for in in comparatively have India Dr Romania organizing industries, in the and Affairs . Reddy’s developing ; established exploring some agreement in relations of the Labs, events, of both including Indian these larger opportunities Sunwave software the at their is facilitating include the market countries expected scale subsidiaries IT, Pharma legation solutions Omnia of for pharmaceutical, is interaction operations signed new to limited, and Professional, level spur and in ventures Thakral Romania the manufacturing between bilateral as in Joint in Trade Agreements evident 1948 Group Romania; FSS chemical, Statement stakeholders, commercial and Activ are from some railway at Group, many and low the on of 119

2017 © The Smart Cube. All Rights Reserved. Exportsand Imports RepresentsRomaniaIndia’sof <1% Total India’s Exports and Imports to/from Romania Imports and India’s Exports Further, betweenand India’s 20102016, share of exports to Romania gradually declined from In FY2016, India In FY2016,had a trade deficit million of with~$66 Romania; which is not a keytrading 0.15% 0.06% 327.6 202.1 2010 2010 partner,goodsIndian as accountRomania’sof for <1% total exports and imports 0.15% to ~0.1% while the share of imports increased from 0.06% to 0.09% from 0.06% increased imports of share the while to ~0.1% 0.15% India’s toRomania Exports India’s Imports from Romaniafrom India’s Imports 349.5 0.12% 349.1 2011 0.08% 2011 Imports ($ million, %, 2010– %, ($million, Imports 265.7 0.08% 379.4 2012 0.09% 2012 Exports to Romania Imports from Romania from Imports ($ million, %, 2010– %, million, ($ Source: UN Comtrade Source: – Source: UN Comtrade Source: byValue Shareand of Overall Exports 0.09% 309.3 0.08% 390.5 2013 2013 – by ValueShare and Overallof 2016) % Share of Total Exports Total of Share % 0.13% % Share of Total Imports Total of Share % 427.5 0.07% 313.6 2014 2014 2016) 253.1 0.07% 291.2 0.10% 2015 2015 Trade Agreements 0.09% 255.2 0.10% 321.3 2016 2016 120

2017 © The Smart Cube. All Rights Reserved. Boost Overall BilateralBoost Trade Trade Can Potential in Certain Sectors/Products . . India’s Exports and Imports to/from Romania Imports and India’s Exports Rubber and Plastics and Rubber Chemicals and Allied and Chemicals Food and Beverages and Food Agreement strong Trading In ― ― ― which engineering In Started Some rights, resuming December Products Medical Instruments Instruments Medical 2016 potential and Devices and between Textiles had duty of , in President negotiations (FTA) 2007 these its cuts 2016, goods applications to Metals , in FTA Romania sectors increase ; autos of the the Tobacco negotiations Electric Machines, Devices and and Electric Devices Machines, the ; India’s Key Exports and Imports to/from Romania India’s Imports Keyand Exports however, Ministry Indian and include European in Photographic Devices bilateral and various spirits, Equipment Ministry Optical and and Optical also India the were pharmaceutical Source: Ministry of External Affairs, India Affairs, External of Ministry Source: industries and Commission, trade treaty identified Exports would encumbered visa of between is External regime, expected including also the Jean and potential Imports benefit by and the -Claude Nuclear Reactors and and Reactors Nuclear Affairs to differences Chemical and Petrochemical and Chemical medical, medical Boilers Machines Boilers came 2 undergo countries to from identified Juncker, to import avionics devices, Products a various de in a areas facto potential laser declared and certain Automotive Parts agricultural, changes -based Iron and Steel and Iron such standstill oil Components Rail Carriage Carriage Rail exploration his as EU sectors Inorganic Chemicals Inorganic Organic Chemicals Organic Rubber and Plastics and Rubber technology due intellectual Trade Agreements support – in India to automotive 2013 Brexit which Free and in into favour property drilling had Trade India and of a 121

2017 © The Smart Cube. All Rights Reserved. (part Dacia ProductionSitesin Romaniaand Vice Versa with Firms Indian of Number Limited Barlad) URB Ford Romania Continental . . . Ford Suzuki Romania Ruia Automotive REGE Consulting Cambric Automotive Companies Doing Business in India and Romania and India in Business Doing Companies Automotive policy Romania due tobetter road infrastructure, and morepredictable and company TATA2015,In Rover Land Jaguar up a Motors setto decided production plantSlovakia instead in of – Ruia and Indian that3 companiesThe have production Romaniaunits in – Very fewRomanian have automotive firms versaproduction vice India and in sites Company Company of Romania Group India (Rulmenti Renault) Sealynx entered the market through rather acquisitions than establishing plantstheir own 2015 factories, India Moreover, Renault It production external It in It are Components to It Technologies and Suzuki The India The It anti The It through It specialising an It Romanian Companies with Operations in India/with Indian Partners Indian OperationsIndia/with with in Romanian Companies s Europe was exports manufactures ells Europe was was used -locking firm subassembly firm established provides -based ships firm India acquired tyres Baleno plants, acquired Ford 3 internally acquired produces manufactures including and India centres components -based exports Indian Companies with OperationsRomania in with Companies Indian Renault’s plant braking industrial manufactured in produced plants, globally Overview to Overview including -manufactured in aluminium engineering Europe engines production in in 2015 in automotive or in a in India systems Gujarat automotive including Romania 2011 Chennai Romania shipped conglomerate 2013 at components to ball by in -manufactured for Pitesti other Amtek India in by die (ABS) (India) Romania by multiple to in plant Ford bearing Ruia, sealants services group casting India other plant Auto, TATA firm Ka+ in in for an email General email General Timisoara Telephone email General email General Timisoara Telephone email General email General Masson email General email General Official contact telephone telephone telephone telephone tyre tyre telephone telephone telephone telephone and and Contact Details (in Romania) (in Details Contact Contact Details (in India) (in Details Contact Contact Details (in India) (in Details Contact TATATechnologies, Amtek Auto plant plant email email : Patrick and and and and and and and and for for 40 91 91 989 914 2042 91 124 473 7324/ info@urb custmail@ford customer@renault nental automotive 91 91 91 ( 91 206 6529090 91 332 2894747 91 info@amtek custmail@ford contact@maruti [email protected] 91 1 800 30044444 Tata Technologies Tata - oriented fiscal 235 908 124 806 124 114 114 Trade Agreements -corporation 412 742 387 611 387 607 234 . ro . 120 2916 3001 5100 india@conti 3001 5414 4444 . com . . com com . co. . . ) com com in 122

2017 © The Smart Cube. All Rights Reserved. Note: Back of Robust Domestic Manufacturing Domestic Robust of Back India AttractiveDestinationfor Investors on and highand logistics Lack of adequate Strong economic . . to report a 7.2% a7.2% report to GDP is expectedGDP growth Advantages and Disadvantages of Investing in India AdvantagesDisadvantages Investingin of and Y Disadvantages Indian Automotive Industry to create state of the art validation, testing and R&D infrastructure in India; continued in slide in Industry Automotive to continued create India; in testing R&D infrastructureIndian state and the art of validation, st by India, the Government of initiative industry. It integrate automotive is it and combineda the with global competencies 1) infrastructure infrastructure - o- NATRiP Centres: National Automotive Testing and R&D InfrastructureAutomotive Centres:NATRiP Project Testing achiev and sector National theto automotive India in aims help ― ― India’s fast counterfeit auto counterfeit However, poor infrastructure, lack of skilled labour force, high level of corruption and systemhave attractivean it made destination for investors FY2017 growth in Y cost – investing in various fields such as industrial parks and special economic zones economic special and parks industrial as such fields various in investing by challenge the addressing is government the infrastructure, required the lacks India Though etc. skills, develop innovation, foster investments, increase to framework transparent a introducing and policies regulatory relaxing by domestic manufacturing promotes 2014, in launched initiative, India’ in ‘Make government’s The India’s India’s - growing economy,manufacturingdomesticfocus onrobust a and financial/banking - parts market are deterrents implemented GST implemented (Goods & Service & (Goods and bureaucratic bureaucratic and Investor hurdles; sluggishhurdles; policies, suchas High corruption judicial system investment investment newly newly Tax) friendly -friendly automotive sector 100% FDI without without FDI 100% prior government government prior High corporate approvalthe in tax rates 2 manufacturer and and manufacturer labour force and and force labour outdated labour Leading vehicleLeading Lack of skilled skilled of Lack global hub for for hub global sourcing auto auto sourcing an emerging emerging an components stringent/ laws no Investing India in ate te automotive R&D R&D automotive counterfeit auto governments and hub centres being parts market parts e established Advantages Emerging core global core global Growing Growing – NATRiP 4 1 124 -

2017 © The Smart Cube. All Rights Reserved. VariousGovernment Initiatives of Back on Spur to Manufacturing Domestic Industry Representatives Opinion on Doing Business in India in Business Representatives Industry Doing on Opinion Inflows BureaucraticFDI and Levels toHamper Corruption High and Labour Skilled Shortage of ‘Make India’in campaignalso is expectedmotivate foreign to set- entities to economy,larger a disposable income and lowering firsthand life avoid cost over cost avoid “Over the past few years,past few“Overthe setting upbusinessIndia in has becomeeasier muchmore than before (though “Indiamanpower,rich isits in but opportunities and facilitiestrain and that gainfully employare by them for skilledforupskilling technicians ofsector.” and that the in abolishingForeign the Investment PromotionBoard, thus simplifyingprocedure the FDI for inflows. The not as easynotother asin developed economiesThe government US).such the as taking is several steps to attract foreign investments in the country. In the national budget for FY2017, we saw the government programme. The programme aims to achieve a fourfold growth in auto industry’s output by 2026.” automotive sectorhas been priority chosentop a as area underMinister’sPrime the ‘MakeIndia’ in “We are“We ranked poorlydoingease on of businesstapered and asthe bureaucracy conditionsIndia in “Automotiveindustry main driverthewill be manufacturing for growthIndia.the in Therefore, the far, few.the otherOn hand, growth in the automotive industry, changing technology, a burgeoning continues to be concerncontinues area.”be to Government’s Make in India PointsPitch to Auto Sector Turnaround, Livemint (2015) Domestic Manufacturing to Showcase Strong Growth on Back Government Back of Initiatives toon Showcase Growth Strong Manufacturing Domestic - runsduties involveddue to importing.” in – Federation of Automobile Dealers Associations, India (February India Associations, Dealers Automobile Federation 2017) of – Nikunj Sanghi, Director, International Affairs & Global Relations, International Relations, Global & Affairs Director, Nikunj Sanghi, Mercedes kad24 (February kad24 2017) - Benz (August 2016)Benz (August – Kaustubhan Srivathsan,Founder and Owner, Roland Folger,Managing and Director CEO, - cycle of carscycle have of triggered huge demand upfactories India, inmainly to Investing India in – 125

2017 © The Smart Cube. All Rights Reserved. Limited Liability Partnerships Liability Limited InvestFirmsWillingIndia in to PreferUp Set to services) import/export consultancyand as goods (such ofguidelines up branch India in foroffices purposeslisted under RBI the years) involvedtrading in manufacturingand cansetactivities profitequivalent- a and or Foreign net100,000 minimum worth entities USD a of (with (BOs) Offices Branch as an Indian Indian an as TypesInvestors Foreign Entities of India Set in Can Up Operating Indian companyproject a or authority sanctioning approvalan from they if RBI the have secured contract a an with set can undertakeForeignplanning toIndia companiesin projects specific (POs) Offices Project liaison activities, and hence can not earn earn can and not anyhence activities, liaison country the in income LO an involvedcannot be norms, RBI per anythingin than other Indian customersinformation about company’sthe products; as informationcollecting about the market and providing prospective established LOs, which act as a communication channel by Foreigntoenter entities looking Indian the market often (LOs)Offices Liaison Entity - up temporarygettheyproject caneasily offices; site and LLP making making track record the in previous5 from RBI the only JV covered A under automatican route only requires approval that or thosecan line add synergies) same the formingstrategic a Indianan with alliance partner (involved in foreignA company can alsocarry out its operations in India by Partner Indian an with JV directorIndian entitythe an mustbe of company)shareholders 7and (for company); public further, the The entity must have at leastshareholders 2 (for private Indiain business out foreign A companysubsidiary to owned canwholly up set a carry Subsidiary Owned Wholly entitled payto any taxdistributionprofitson of maintenance and exit;moreover, unlike a company, they are not LLPsareset- of gaining ease popularityon account of partnership firm (organisational flexibility) companyseparate(operating a entity) a and business as hybrid A entity, LLPan offers combinedthe advantage a of Partnership (LLP) Liability Limited Branch Offices Regulatory Framework as a Foreignas a Operating Entity up, 127

2017 © The Smart Cube. All Rights Reserved. Note: Establishing an Entity in the Country Indian LegislationEntails Several Steps for 2) DIR 2) 1) INC 1) 3) INC 3) Key Steps for Establishing a Wholly Owned Subsidiary A minimum of 2 directors need to apply apply to need directors 2 of minimum A for a Digital Signature a for Certificate (DSC) - - - 12 7 22 account and begin operations in in India operations account begin and documents need to be filed with the with filed be to need documents – – – The company can now open a bank bank a open now can company The Application for incorporation of a company (other OPC than company a of incorporationfor Application and Applicant Particulars of appointment of directorsof Particulars the and appointment theof and among them personnelchanges key managerial Notice of situation or change of address of the registered office of the company the of office registered the of address of or change situation of Notice BO/LO have to file Annual ActivityAnnual to file have BO/LO Certificates Certificates audited balance and documents, the RoC emails the emails RoC the documents, the the company using form INC form using company the RoC for registration registration the under for RoC Certificate of Incorporation to to Incorporation of Certificate Once RBI grants approval, the approval, grants RBI Once Applicant applies for name of of name for applies Applicant stamp needs (to reserve the name) the (to reserve duty After verification of After to Companies Act) Companies pay RoC’s the entity the sheets sheets fees -1 6 4 2 7 5 3 1 – one - person company) 5 3 6 4 2 1 any required application The The registers issues Police of the region the of Police of General Director theto communicated be must BO/LO of establishment, details Upon Articles of AssociationArticles of of the company INC file form INC form file to has applicant the name, the approves (RoC), Companies of Registrar the Once Director’s Identification Number (DIN) Number Identification Director’s the to for apply All directors need The AD -22 RoC RoC foreign the 3 Category ,along with Memorandum and and Memorandum with ,along documents verifies certificate the verifies (form -7 entity 1 foreign , form DIR form , Regulatory Framework – the I FNC bank the of to filed -1 submits registration RBI ) documents, office and -12 documents through 2 other and form form and

and the Key Steps for Establishing a Branch/Liaison Office Branch/Liaison a Establishing for Steps Key 128

2017 © The Smart Cube. All Rights Reserved. Note: Indian Market Indian Comparisonof Various Methodsof Entering the 1) FEMA stands for Foreign Exchange ManagementAct; Requirement Commencing as per Approval for for Approval Repatriation Legal Status Legal Compliance Income Tax Particulars Permitted Activities Activities Business Rate Key Key FEMA 1 parent company business activity, Since an LO an Since does Indian auditors) Represents the to be filed with with filed be to up any business taxesin India as Annual activity it does not takenot doesit not takenot up any it is not subject subject not is it Liaison Office Liaison Not subject tosubject Not activity within within activity repatriations Specific RBISpecific (audited by by (audited Only liaison the countrythe certificate approval activities required to any any to RBI continued in slide note slide in continued Extended arm of arm Extended permitted by the requiredremit to Taxedat rate the Indian auditors) to be filed with with filed be to Annual activity Office/Branch Office/Branch posttax profits corporations Only activities applicable to Specific RBISpecific (audited by by (audited No approval the parentthe certificate company approval required Project foreign foreign Office 40% RBI RBI 4 – Activities specified Subsidiarycan be relatedforeign to issuance/transfer Memorandum of in the company’s the in set up subject to up subject set foreign investors foreign requiredremit to FDI regulations Alternate Tax@ income at 30% income (subject toFDI (subject Taxedon global posttax profits annual filings 18.5% on book book on 18.5% liabilities and Independent periodic and and periodic of shares to of Need to file tofile Need Association No approval on neton basis guidelines) Subsidiary Subsidiary Company Minimum profits 2 4 Regulatory Framework granting 100% FDI granting 100% consideration for up tosubject FDI permitted under All the activitiesAll Minimum Tax@ requiredremit to income at 30% income Taxedon global posttax profits LLP canLLP set be adjusted total contribution Independent Need to file tofile Need on neton basis regulations No approval amount of the sector details on Alternate 18.5% of of 18.5% income capital LLP 3 4 5 129

2017 © The Smart Cube. All Rights Reserved. Appendix Appendix Carrier Passenger Two Wheelers Load Carrier MarketKey Shareof Players Two in Segment 55.3 38.6 54.3 – Market(%) Leader Key Players Key - And ThreeAnd Three Two 26.7 20.6 25.8 - wheeler - wheeler - wheeler Segment Other KeyOther Players (%) 20.1 8.8 13.4 4.9 5.5 11.8 Appendix 131

2017 © The Smart Cube. All Rights Reserved. Sector Appendix Ford International Major Foreign Investments Foreign Major India’s in 2014 Sector Automotive (April Suzuki Motor Corporation Motor Suzuki Continental Automotive Fiat GroupAutomobiles SAICMotors General Bussan AutomotiveBussan Foreign Collaborator Yorozu Corporation Showa Corporation ToyodaIron Works Isuzu Motors Asia MAN and Ford Motors Renault Group Nissan MotorNissan Caparo Daimler AGDaimler NHK Spring Investment Singapore TruckBus & FCC India – Services Services FDI Inflowin India’s Automotive Netherlands Netherlands China, HongChina, Singapore, Singapore Germany, Germany Germany Kong, US Kingdom Country United Japan Japan Japan Japan Japan Japan Japan Japan Italy US MAN RenaultAutomotive Nissan RenaultAutomotive Nissan AutomotiveBrake Systems ToyotesuAuto India Parts, Daimler India Commercial India Daimler Components, Continental CaparoIndia Engineering Continental Automotive Yorozu JBM Stanzen Toyotesu India Fiat India AutomobilesFiat India Suzuki MotorSuzuki Gujarat GeneralMotors India India YamahaIndia Motors Isuzu Trucks Force (Man India NHK Automotive Automotive NHK FCC Clutch Indian CompanyIndian Components Showa India Tamil Nadu Ford India Vehicles Motors India Truck) India India Automotive Automotive India – March 2016) ($ million) 973.93 477.61 389.04 116.67 169.20 979.5 72.53 72.51 33.09 56.77 95.19 42.70 31.31 48.49 52.85 29.72 27.77 FDI FDI Appendix 132

2017 © The Smart Cube. All Rights Reserved. Labours Labours Appendix Labour MarketLabour Analysis ITI Automobile OEMs Automobile Graduate 53% 22% 15% 5% 5% – Diploma Educational Qualificationof Auto Components Auto Educational in - Sub Qualifications 12th or Below or 12th 40% 35% 18% 2% 5% Post Graduate Post Service Centers Service 45% 30% 10% 15% 0% Sectors Dealerships 13% 70% 10% 2% 5% Source: EY Source: Appendix 133

2017 © The Smart Cube. All Rights Reserved. Automotive Industry Automotive Appendix Key: Skills Comparison of Indian Automotive Industry vis Industry Automotive Indian of Comparison Skills Latin America Eastern Central & East Asia Europe In competition Indiawith competitive Indiathan Less – Mexico Brazil Turkey Hungary Russia Slovakia Poland Romania Czech Vietnam Indonesia Thailand China Korea Skill Comparisonof Indian Republic Manufacturing Source: IBEF Source: Skills - à - vis Peers Manpower Costs Supplier Base Appendix 134

2017 © The Smart Cube. All Rights Reserved. Relevant Links Relevant Department of Industrial PolicyPromotion & Transparency International Indian Ministry of Skill DevelopmentMinistry Skill of & Entrepreneurship World Organisation Internationale Constructeursdes Society WorldRankings Business Doing of Ease Bank NationalSkill Development Corporation Emerging Markets Ministry Press InformationPress Bureau India of Bank WorldwideBank GovernanceIndicators Indian Institute& Peace for Economics of Indian Manufacturers Indian of Automobile Index of Economic Freedom EconomicIndex of Central IntelligenceAgency Ministry Reserve brandEquity Foundation of Commerceof(Import and Export Entity/Institution d’Automobiles UN Comtrade Data Bank) of External Affairsof Bank of India ofBank Investor Association Corruption PerceptionIndex www.info.worldbank.org/governance/wgi/# http://www.commerce.nic.in/eidb/Defaul http://pib.nic.in/newsite/mainpage.aspx http://www.skilldevelopment.gov.in www.doingbusiness.org/rankings www.heritage.org/index/ranking https://www.nsdcindia.org/New https://www.cia.gov/index.html www.transparency.org/cpi2015 www.economicsandpeace.org https://comtrade.un.org/data http://www.siamindia.com http://www.mea.gov.in https://www.rbi.org.in http://www.emia.org https://www.ibef.org http://www.oica.net http://dipp.nic.in reports t.asp Link Appendix 135

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