India should unite a fractured world: Bob Sternfels, global managing partner at McKinsey

Time of India

a day ago

The upside for
India
lies in becoming a connector, not a divider, amid geopolitical challenges, said
Bob Sternfels
, global managing partner at McKinsey & Co, in an exclusive interview to ET referring to the country's neutral stance in a world rapidly polarising into rival power blocs.
"If India can walk that tightrope, staying connected to everyone, that's the real opportunity." A self-confessed Indophile, Sternfels brought the entire McKinsey board to India for the second time in his tenure. In a wide-ranging conversation, he and McKinsey India managing partner
Rajat Dhawan
discuss doing business in a polycrisis beset world, India's next leg of reforms, McKinsey's evolution, and how Gen AI will reshape consulting. Edited excerpts:
Being strategically neutral in a world of fragmented power blocs and rising economic nationalism is a double-edged sword for India. It can either pay off or backfire. How can India get the best economic outcomes without getting caught in the crossfire?
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Is it the best? It could be. But I think the game is still being played out. I deeply believe in India's potential. That said, today's geopolitics clearly present challenges. How does India navigate them? In my words, the upside case for India is about whether it can stand as a connector country rather than a divider country-a connector not just between the US and China, but also with other parts of the world. India's largest trading partner now is the Gulf, and there's massive headroom for more growth there. But we shouldn't forget Europe either. One of the unintended consequences of the current geopolitical environment is that we're seeing a bit of a European revitalisation, more investment, more urgency, more action. That has real implications for India, not just in terms of European companies operating here, but also Indian companies stepping into Europe. Increasingly, India's leading companies are global companies, not just Indian companies. So, the upside is real-if India can walk that tightrope, staying connected to everyone. That's the real opportunity.
In this era of overlapping crises - wars, protectionism, supply chain resets - do you see new trade corridors emerging, while some older ones shrink structurally or lose relevance? Where do you think India should place its bets?
There are just more and more significant events to deal with in the world today. From a CEO's perspective, there's a mindset shift underway. Instead of waiting for stability, leaders are building resilience into their models, accepting that long-term volatility may be the new normal. At McKinsey, we believe new trade corridors will emerge, which is why I've made it a global initiative I oversee directly. The world is reconnecting in unexpected ways. I was in South America recently-Colombia, Argentina, Chile-and CEOs there are showing real interest in India, which wasn't the case two years ago. Now we're exploring how to bring Brazilian CEOs to Mumbai, and how Indian global leaders can engage with South America, an entirely new corridor with real promise. My main point is this: we're moving toward a world with more trade corridors and less dependence on a few dominant trunk routes. If you map the next 25 years, I think you'll see a far more distributed, multi-node network. That's where I see real opportunity going forward.
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Rajat Dhawan:
Today, around $33 trillion of trade flows globally. That's expected to grow to somewhere between $42 to $45 trillion by 2035. India's top five trade corridors, with the US,
European Union
, Middle East, China, and parts of the Far East, are all positioned with positive tailwinds. And I mean both geopolitically, and in terms of tariffs. So, what the data strongly suggests is that India's trade flows, both imports and exports, are on track to triple from current levels.
What's your take on how companies, including Indian ones, are coping in this age of polycrisis?
More ready, but not ready enough. I think the level of sophistication, understanding, and response-our ability to absorb shocks-has improved compared to where we were pre-Covid. I remember being here at this very hotel in December 2019. Not in a single conversation did we mention a global pandemic. Just six weeks later, the world completely changed.In just five years, the world has moved and so has enterprise. I do believe businesses have become more resilient. Leaders today consider a wider range of scenarios. Many companies now have a dedicated discussion on geopolitics at the board level. But have we gone far enough to withstand future shocks? I do not think so. I do not believe investors fully appreciate or reward companies for being resilient. That, to me, is the next frontier.
The last 10 years of reforms have ensured that India has been a bright spot in a weak global economy. But we need to think big again to lift a nation of 1.4 billion into a new phase of growth. What should the next leg of reforms focus on?
I do think the progress India has made over the last decade has been miraculous. From digital ID to healthcare and energy, the scale, speed, and depth are unmatched. But I worry about what comes next. Midway through a journey, how do you accelerate? It's like a marathon; most want to just finish. But the winners change gears in the second half. And for India, the window is now, when India is young. India has around 30 years before it becomes an aging society.
Youth
is India's advantage, and we need to move faster not settle for 5.5 or 6 percent growth. Can we push for 7 or 8 percent? To do that, we need a jolt. One is capital: more FDI, broader capital market evolution, and investment from the GCCs and beyond. The other is talent. In this era of rapid change and AI, the value lies not just in what you know, but how fast you can learn. The education system must prioritise learning agility, and that combined with capital, could make that leap.Rajat Dhawan: We do believe we are at a critical point. After 11 years of this government pushing forward strongly, the impact is clearly visible. But now, I think we are at a stage where a few things are needed. First, a new approach to capital formation. We have to move from linear, point-to-point infrastructure to economically dense infrastructure. That shift requires foreign capital, and with it comes access to global technology. Second, we need to ensure that multinational companies can thrive here. Today, value creation has increasingly shifted back to domestic players, which may not be healthy in the long run.