Not worried about impact of tariffs as much as impact of AI: Richard Lesser, BCG global chair

Stating that no one knows how tariffs would play out between India and the US and that the future is ‘not clear and unlikely to be stable’, he maintained that a tariff policy will serve the strategic interests of both the countries and that he was optimistic that US and India would get to some level of a tariff policy.

Richard Lesser, BCG Chair

Even as the Indian economy and markets have been feeling an overhang of the ongoing tariff deal with the United States of America, Richard Lesser, Global Chair of Boston Consulting Group (BCG) said that he is not worried about impact of tariffs as much as impact of Artificial Intelligence (AI), which he termed as ‘critically important’.

“For me, the impact of tariffs relative to factors like AI would turn out to be smaller rather than larger. I am not trying to minimise the impact on sectors of the economy but overall I think it’s easy to focus on the political challenges of the near term but as business leaders keeping the focus on more fundamental underlying changes in the economy which are first and foremost characterised by multiple revolutions in technology, of which the one that is most in front of us now is AI. It is just critically important,” said Lesser, during an Idea Exchange session at The Indian Express.

Stating that no one knows how tariffs would play out between India and the US and that the future is ‘not clear and unlikely to be stable’, he maintained that a tariff policy will serve the strategic interests of both the countries and that he was optimistic that US and India would get to some level of a tariff policy.

“President (Donald) Trump believes deeply in the power of uncertainty and so the idea that we know how tariffs would play out in the US, I don’t think any of us know. When we are asking question on future, my assumption is that future is not clear and unlikely to be stable. I personally remain optimistic about India-US relationship and I know it has been a very difficult year but I believe the strength of US-India relationship remains important to both the countries. I believe the opportunities to work together remain enormous and I believe that at the end of day, despite the ups and downs, there is a real chance to get to some level of a tariff policy that will serve both countries strategic interest.” Stating the importance of AI, Lesser said that AI is not an ‘and/or’ question. It’s an ‘and’. He pointed that AI will help people learn at an accelerated rate and will both encourage and force people to adopt broader skills. “AI will give young people more power to deliver value in their jobs than they have ever had before,” he said.

Stating the importance of AI adoption, he said that no major country ‘has a choice’ and that they will have to think about how to participate and encourage responsible usage.

He further said, “AI can be an accelerant to productivity growth, it can be an accelerant to faster learning and it can be an accelerant to building capabilities that didn’t previously exist. As India is trying (to build) its industrial base, in its education system, and other aspects of its economy and is trying to put itself on an accelerated growth path, AI can be a massive support on these very critical priorities for both industry and for society more broadly.” He, however, pointed that it comes with a challenge that we have to acknowledge that in many cases, it will be taking work that people could do, though in some cases, that may be a good trade-off, he noted.

Speaking about concerns around AI bubble globally, Lesser said that the term concerns him as it mixes things together that should be separate.

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“There are three simple points. Is there an over investment in AI infrastructure like energy, power and data centres in the near term? The answer is yes, of course it is possible. Every time there has been a massive shift in global capital, no one has the crystal ball to get it right at the start. So, there is a good chance that there will be over investment for a period of time…. Two, will there be usage of assets built for AI over time much like rare earth or dark fibre that was laid 25 years ago. I think the answer is yes; Three, we are still at the early usage of AI in downstream usage. Most companies are in the early stages. Currently, only 5-6 per cent companies are deploying AI at scale across broad parts of the enterprise. 30-40 per cent are starting on that journey to deploy it at scale. 60 per cent are in the stage of doing pilots and starting their efforts. So the answer is no,” he said.