“Interview with Prof Rakesh Mohan Joshi - Vice Chancellor, IIFT”
Team MBA Rendezvous recently met Prof. Rakesh Mohan Joshi. The discussion highlighted the Impact of Geopolitical Conflicts on India's Trade and Economy and concluded with the need for global competitiveness in management education, advocating for international accreditation and collaboration to enhance India's global standing. Following is an excerpt:
Team MBA Rendezvous - How are current geopolitical circumstances likely to impact India's trade & economy?
Prof. Rakesh Mohan Joshi : The international conflicts as of date have given a lot of uncertainty into the global, international economic framework before the world could recover post-covid. The ongoing Russia-Ukraine war, now in its third year continues to disrupt global supply chains and increase energy prices. Post-COVID the manufacturing sector was in bad shape and the services sector was completely closed. China, considered the factory of the world, took a longer recovery period than India. Except for a few months in COVID, our Purchase Manufacturer’s Index was always above 50, among the highest performing in terms of manufacturing growth. This along with problems in the Middle East, a crucial source of energy for India is devastated and transformed due to the Taliban, Afghanistan, and ongoing conflict in Israel and Palestine. Before that, the Red Sea crisis in the Middle East where Houthi militants attacked the ships in the Suez Canal led to the closure of the route. And now other countries like Lebanon, Syria, and maybe Iran are involved directly or indirectly in the war.
The first impact can be seen on the Energy Crisis. India is the second largest importer of Petroleum importing nearly 85% of its requirements. While the Middle East was a major import partner in FY 22, accounting for 34% of India's oil imports, that declined to 23% in FY 24. Conversely, Russia's share in India's oil imports has increased from 2% in FY 22 to 36% in FY 24, making it a significant supplier. India's decision to import oil from Russia despite being economically isolated by the Western powers has severally been criticized. But had India not imported petroleum from Russia, the petroleum prices could have been skyrocketed.
There has been trade diversion and a slump in western economies during recent years impacting India's export growth. India's export growth rate last year was significantly lower than expected, raising concerns about the country's trade outlook. This has resulted in increased commodity prices, including gold and oil. India could amazingly maintain its neutrality in global conflicts being close to all. This has enabled India to diversify its energy sources, reducing dependence on traditional suppliers like Saudi Arabia and benefiting from cheaper oil from Russia and Iran.
Another impact due to the blockage of the Suez Canal which has led to significant increases in logistics prices in freight costs, impacting global trade, including India's exports to Western markets. The Russia-Ukraine conflict disrupted global food supplies, particularly grains and sunflower oil. This led to increased agro prices worldwide. India, a major exporter of food grains in the world, played a crucial role in stabilizing global food markets. It had to restrict rice exports due to domestic concerns. However, India continued to supply rice to friendly countries like Bangladesh, Maldives, and Nepal.
Also, the sudden closure of China as a manufacturing hub, the growing trade tensions between America-China and China-Australia, increase in tariffs by America especially on Chinese goods have disrupted global trade and have prompted many multinational companies to explore alternative manufacturing destinations, including India. This shift presents a significant opportunity for India to attract foreign investment and boost its manufacturing sector. We are neutral to the war. So I think it is not impacting but it has indirectly impacted India's trade with western markets and America. therefore we could not achieve the desired growth rate in trade but domestically we have no problem.
Team MBA Rendezvous - How India should balance the ecosystem of rural and urban markets?
Prof. Rakesh Mohan Joshi: Rural markets are extremely important to India, unlike the West. Since 60-70% of the population resides in rural areas, considerable growth is expected to come from rural markets. Furthermore, agriculture, a key employer for over 60% of the workforce, and related industries are essential for national stability. Therefore, India must balance the ecosystem. The rural marketing problems are serious and complex, including small farming sizes, making mechanization difficult and if we do not use innovation and technology competitiveness is difficult. Additionally, logistical inefficiencies lead to a 25% to 30% waste of horticulture products like fruits and vegetables. The availability of the marketplace for rural people is extremely important. Government initiatives like the National e-Agriculture Market and some reforms are commendable. India's dairy sector, particularly Amul, exemplifies the potential for cooperative models. Amul is among the top five companies in the world. And in the next 20 to 30, years, the growth in the dairy sector, both in consumption and production, is likely to come from India.
To maintain competitiveness in agriculture, India needs to focus on structured, sustainable practices and embrace technological advancements. AI, drip irrigation, and real-time information systems are improving efficiency and productivity. India's robust democratic system, even at the village level, empowers farmers. However, state-level variations in labor policies and minimum wages pose challenges. Despite this, India's strong digital infrastructure and government initiatives like rural road development and Sagar Mala projects are driving rural growth and development. India's digital infrastructure, particularly in payments, is a global leader. Innovations like UPI and QR codes have revolutionized the way Indians transact, setting a global benchmark for digital payments.
Team MBA Rendezvous - How is India’s trade radius shaping up for the future?
Prof. Rakesh Mohan Joshi: India's share in world exports has remained stagnant at 1.8% for a decade. While absolute export values have increased, India is actively addressing challenges to further boost its export potential. India's recent Free Trade Agreements (FTAs) with Australia, UAE, and Mauritius, along with ongoing negotiations with Europe and the UK, aim to boost trade and attract foreign investment. Notably, the comprehensive economic partnership treaty with EFTA, especially Switzerland, promises significant investment and technology transfer. We need to increase the competitiveness of our products in the international market by focusing on value-added products and branded commodities. This involves moving up the value chain and reducing reliance on exporting raw materials or commodities like refined petroleum, gems and jewelry, and electronics manufacturing. To boost exports, India is focusing on value-added products and identifying proper markets. Initiatives like "One District, One Product" promote local exports, while district export promotion committees and Indian missions abroad facilitate the process. The Department of Commerce very closely monitors export growth, so I am very optimistic that India will soon become a major force in International Trade.
Team MBA Rendezvous - How would you prefer to position IIFT in comparison with IIMs?
Prof. Rakesh Mohan Joshi: IIFT distinguishes itself from the 21 IIMs by its specialized focus on International trade and business. While IIMs offer general MBAs, IIFT provides specialized education in International trade covering the entire, value chain of international trade. It is International business including international marketing, operations, HR, finance, and logistics. This specialization, coupled with a range of programs (full-time, part-time, executive development programs, and certificate courses), positions IIFT as a unique institution in the field of international trade. We have a dedicated center for distance learning and online education. We work very closely with the government and the industry. IIFT provides live support for government and industry in making their export strategies, international trade strategies and internationalization plans. IIFT has highly dedicated faculty available 24/7. We provide high-quality research and capacity-building programs for governments, corporates, and diplomats in India and abroad. Our upcoming Dubai campus will further elevate IIFT's global presence.
Team MBA Rendezvous - Please share your vision on Management education & how we can compete Globally
Prof. Rakesh Mohan Joshi: There is no shortcut that the Indian education system competes globally. If you don't compete globally, you cannot compete domestically. Annually, 4 to 7 lakh students, primarily from developing countries, seek higher education abroad, often in countries like the US, Canada, Europe, and China. This highlights the need for India to internationalize its education system and offer competitive quality and pricing. Non-English-speaking countries like China and Russia are offering English-medium programs. To compete globally, Indian institutions must benchmark their courses with international standards and strengthen industry partnerships, the way IIFT does A holistic approach to education is crucial. While India has a large number of universities, focusing on quality and international accreditation is essential. Collaborating with international agencies and achieving recognition from bodies like AMBA, EQUIS, and AACSB is vital to enhancing India's global reputation. Government support in facilitating mutual recognition of Indian accreditation standards with international ones is necessary to ensure global acceptance of Indian degrees.
While studying abroad, particularly in countries like the US, Europe, and the UK, a student foresees his career. Negotiating for greater mobility of skilled professionals within free trade agreements is also crucial. To internationalize and attract foreign students, India needs to address visa restrictions, offer scholarships, and create a conducive environment. This includes improving visa processes, offering scholarships, and fostering collaborations with foreign universities to establish campuses in India. In time to come, I am highly optimistic that India would become global hub for international education.