Global Uncertainty Tests India’s Growth Story

HASLINDA: LIVE FROM THE NEW ECONOMY FORM IN DELHI, THIS IS INSIGHT WITH HASLINDA AMIN. ONE WORLD'S FASTEST-GROWING MAJOR ECONOMIES COMPETING GLOBALLY FOR INVESTMENT, TECHNOLOGY AND TALENT. AS GEODE -- GEOPOLITICAL TENSIONS RESHAPE TRAITS AND AI TRANSFORM INDUSTRIES, CAN IT LEAD TO SUSTAINED LONG-TERM GROWTH. WE WILL FOCUS ON ALL THAT YOU'RE AT THE BLOOMBERG NEW ECONOMY FORM AS WE COUNT DOWN TO KEYNOTE SPEECH FROM NARENDRA MODI. INVESTORS AND BUSINESS LEADERS WILL BE LISTENING FOR CLUES ON INDIA'S ECONOMIC AMBITIONS IN THE CHANGING GLOBAL ORDER AND PLANS TO ATTRACT INVESTMENT AT A TIME OF HEIGHTENED UNCERTAINTY. ALSO AHEAD WE WILL SPEAK LIVE WITH THE IMF CHIEF ECONOMIST AS THE FUND RAISES NEXT YEAR'S GLOBAL GROWTH FORECAST BUT WARNS RESILIENCE IS UNDER STRAIN. AND MIKE CANNON BROOKES JOINS US EXCLUSIVELY ON WHAT THE TRANSFORMATION MEANS FOR CUSTOMERS, -- COMPETITION AND GROWTH. WE WILL DISCUSS INDIA'S GROWING ROLE AND DURABLE HEALTH CARE AND THE OPPORTUNITIES AHEAD. ALL THAT AND MORE COMING UP AS WE BRING YOU THE BIGGEST NAMES AND BEST CONVERSATIONS FROM THE BLOOMBERG NEW ECONOMY FORUM. ♪ BLOOMBERG'S NEW ECONOMY FORM IS JUST GETTING UNDERWAY HERE IN NEW DELHI. INDIA'S HOSTING FOR THE FIRST TIME I LATER PRIME MINISTER NARENDRA MODI IS SET TO ADDRESS KEY POLICY MAKERS AND BUSINESS LEADERS GATHERED HERE. THIS CROSSOVER TO MY COLLEAGUE SHERY AHN, THIS IS THE EIGHTH EDITION OF THE NEF HOSTED FOR THE FIRST TIME IN INDIA. WHAT ARE WE EXPECTING? SHERY: PRIME MINISTER MODI IS EXPECTED TO ARRIVE ANYTIME NOW AT THE HOTEL HERE IN CENTRAL DELHI. WE'VE SEEN PARTICIPANTS OF THE NEW ECONOMY FORM ALREADY LINING UP TO GO SEE THE PRIME MINISTER. HE ALREADY WELCOMED BLOOMBERG, SAYING INDIA'S NOT ONLY AN INVESTMENT DESTINATION ANYMORE, IT'S ACTUALLY A RELIABLE PARTNER IN SHAPING THE GLOBAL FUTURE. WE ARE SEEING HEAVY SECURITY AROUND THE HOTEL RIGHT NOW IN THE ENTRANCE OF THE HOTEL BUT IS NOT JUST BECAUSE OF PRIME MINISTER MODI'S ARRIVAL, IT'S BECAUSE OF ALL THOSE HIGH-PROFILE GUESTS THAT YOU MENTIONED WILL BE ARRIVING HERE FOR THE EVENT. THE FORMER COMMERCE SECRETARY OF UNITED STATES, NOT TO MENTION THE FINANCE MINISTER OF INDIA, ALSO CORPORATE LEADERS AS WELL AND GLOBAL LEADERS FROM BRAZIL OR ALL COMING HERE TO INDIA TO HAVE DIFFERENT CONVERSATIONS AROUND THE STATE OF THE INDIAN ECONOMY AND THE GLOBAL ECONOMY, NOT TO MENTION LEADERS OF GEOPOLITICAL CONFLICT WE ARE SEEING AROUND THE WORLD. IT'S NOT JUST THE SKI -- SECURITY BECAUSE WERE EXPECTING ALL THOSE NEWSMAKERS TO COME, WE'VE SEEN SECURITY POLICE AND PARAMILITARY FORCES AROUND DELHI IN THE PAST FEW DAYS AND TENSIONS HAVE BEEN RISING. WERE TALKING ABOUT STUDENT PROTESTERS BEING DETAINED AND RELEASED OVER THE WEEKEND. WE HAVE THE GIN SEE LED PARTY VOWING TO CONTINUE ITS PROTEST, SEEKING ELECTORAL REFORMS AND THEY WANT THE RESIGNATION OF THE CHIEF ELECTORAL COMMISSION OFFICIAL ON ALLEGATIONS OF MANIPULATION OF VOTERS. THERE IS A LOT TO CONTEND WITH IN THIS BACKDROP AS WERE WAITING ALL THESE NEWSMAKERS TOGETHER HERE IN NEW DELHI. HASLINDA: AS YOU SAID, THE PRIME MINISTER EXPECTED TO SPEAK SOON AGAINST THE CHALLENGING BACKDROP. IT'S NOT JUST ABOUT THE PROTEST BUT ALSO THE ECONOMY THAT HAS SLOWED DOWN FROM 7.7% TO 6.5%. WHAT IS HE EXPECTED TO SAY? SHERY: I MINISTER MODI HAS ALREADY WELCOMED THE NEW ECONOMY FORUM SAYING HE WANTS TO BUILD INDIA INTO A RELIABLE FUTURE OF GROWTH FOR THE WORLD ECONOMY. THE CHALLENGES ARE THERE, RELATIVE TO THE ENTIRE WORLD, AT THE SAME TIME INFLATION IS ACCELERATING. INFLATION LAST MONTH COMING IN WITH AN ACCELERATION OF 5.5% FROM A YEAR AGO. THIS IS TOWARD THE HIGHER PART OF THE TOLERANCE THEY AND FROM THE RBIS. PERHAPS NOT SURPRISING GIVEN THE ISSUE OF ENERGY. 90% OF ITS OIL NEEDS COME FROM OVERSEAS, NOT TO MENTION THE EXPECTATIONS OF HIGHER RATE HIKES. INFLATION EXPECTATIONS GOING UP. THIS MORNING IT WAS RAINY AND WET BUT THAT HASN'T NECESSARILY BEEN THE CASE FOR THE ISSUES MONSOON SEASON WHICH DELIVERED ABOUT 13% LESS RAIN IN THIS COUNTRY. THAT SPEEDING THROUGH TO CROPS AND FOOD PRICES AND MONETARY POLICY. THE RBIS STARTED ITS HIKING CYCLE RECENTLY GIVEN THESE CONCERNS. HASLINDA: THAT'S RIGHT, AND THE RUPEE IS HOVERING CLOSE TO RECORD LOW, 97 TO THE DOLLAR. SHERY AHN AT THE GLOBAL ECONOMIC FORUM HERE IN DELHI. THE IMF SAYS GLOBAL GROWTH SHOULD PICK UP NEXT YEAR WITH A BOOST FROM AI INVESTMENT THIS MORNING THE WORLD ECONOMY IS NEARING THE LIMITS OF ITS RESILIENCE IN ITS LATEST WORLD ECONOMIC OUTLOOK. THE IMF MAINTAINS 3.4% GROWTH FORECAST FOR 2027 AND HAS RAISED ITS EXPANSION ASPECT FOR THIS YEAR TO 3.1%. BUSINESSES HAVE CONTINUED TO ADJUSTED -- TO ADJUST TO REPEATED SHOTS BUT WARNS IT COULD CHANGE AS THE ENERGY SQUEEZE PERSISTS FINANCIAL RISK CONTINUE TO BUILD. LET'S GET MORE ON THE IMF REPORT WITH AVRIL HONG, WHO IS STANDING BY IN BANGKOK. AVRIL: A VERY SPECIAL GUEST INDEED, THE CHIEF ECONOMIST OF THE INTERNATIONAL. GREAT TO HAVE YOU WITH US. TALK TO US ABOUT WHAT YOU'RE SEEING IN THE GLOBAL ECONOMY BECAUSE THERE IS RESILIENCE. THE QUESTION IS, CAN IT CONTINUE INTO NEXT YEAR AND BEYOND? >> THANK YOU. INDEED, THE LOCAL ECONOMY HAS BEEN RESILIENT BUT THAT RESILIENCE IS REACHING ITS LIMITS WITH RISK FILTERED TO THE DOWNSIDE. WE EXPECT THE GLOBAL ECONOMY TO GROW THIS YEAR, 40 BASIS POINTS LOWER THAN LAST YEAR AND TO PICK UP AGAIN TO 3.4% IN 2027. THERE WERE TWO MAIN FACTORS, FIRST IS AI WHICH HAS LED TO DEMAND, PUSHING ACTIVITY AND PROCESS UP. THE OTHER ELEMENT IS FLEXIBILITY IN ENERGY MARKETS WHICH IS MEANT ADJUSTMENT, REROUTING OF SUPPLIES AND INCREASE PRODUCTION OUTSIDE THE CONFLICT REGION AND SUBSTITUTION TOWARD OTHER SOURCES OF ENERGY AND RENEWABLES. ALL THESE MARGINS HAVE HAD TO BE RESILIENT AND SOME OF THEM ARE REACHING LIMITS. AVRIL: EXACTLY THE POINT THAT HAS BEEN RAISED IN THE REPORT IN THE WAY THAT ENERGY INVENTORIES HAVE BEEN DRAWN DOWN, AND WITH THAT IN MIND, DO YOU THINK AI WILL CONTINUE UPSETTING THE SHOCKS THAT COULD? ? COME TO GROWTH WHAT IS IN THE BALANCE HERE? >> THERE IS A LOT OF UNCERTAINTY ON AI. WE EXPECT THE AND CYCLE TO CONTINUE FOR SOME TIME AND THAT IS PUSHING INVESTMENT. THE KEY COMMISSION IS WHETHER INVESTMENT WILL CRYSTALLIZE TO HIGHER PRODUCTIVITY GAINS. WE HAVEN'T SEEN THOSE PRODUCTIVITY GAINS YET IN THE MACRO DATA. THERE ARE SOME STUDIES THAT ARE MORE GRANULAR, LOOKING AT MICRO GAINS FOR PRODUCTIVITY BUT WE HAVEN'T SEEN THOSE REFLECTED YET. AVRIL: WHAT ABOUT THE IMPACT FROM AI ON PRICE PRESSURES BEYOND PRODUCTIVITY BUT ALSO ON HOW PROCESS A FED THROUGH INTO AND INFLATIONARY ASPECT? >> SO FAR WE ARE SEEING ONLY THE DEMAND EFFECTS OF AI, THE INCREASED INVESTMENT. THAT IS PUSHING UP PRICES OF KEY PRODUCTS INCLUDING CHIPS AND SEMICONDUCTORS. SO THAT IS THE SOURCE OF INFLATIONARY PRESSURE IN MANY COUNTRIES. AVRIL: TALK TO US ABOUT WHAT YOU'RE SEEING IN TERMS OF THE INDICATORS THAT AI IS WORKING TO IMPROVE PRODUCTIVITY. WHAT WILL THE IMF BE WATCHING OUT FOR? >> THOSE ARE NOT YET SHOWING ANYTHING FROM AI OR ANY SIGNIFICANT CHANGE IN PRODUCTIVITY. IT MIGHT STILL COME, IT IS ALREADY ON. WHAT WE ARE SEEING RIGHT NOW IS INCREASING INVESTMENT, INCREASING TRADE ON HOW AI IS DRIVING THIS DEMAND. AVRIL: WHAT ABOUT WHEN IT COMES TO THE ERA OF GLOBAL EUROS, WHAT IS DRIVING THIS AND HOW MUCH OF IT IS STRUCTURAL? >> THERE ARE THREE ELEMENTS BEHIND THE INCREASE IN YIELDS. FIRST IS AI, ACTIVITY AND PRICES , AND RESPONSE FROM CENTRAL BANKS. THE SECOND IS ENERGY PRICES, QUALITY PRICES TRIGGERED BY THE WORLD INCREASING COMMODITY PRICES AND THE GLOBAL SUPPLY SHOCK. IT DRIVES UP PRICES AND HAMPERS PRODUCTIVITY. THE LAST ELEMENT IS IN INTERRUPTION ON PREMIUM TERMS, WITH HIGH EQUITY INTEREST RATES. INVENTORIES REQUIRE EXTRA PREMIUM OUR COMPENSATION FOR THE RISK. THAT IS PLAYING OUT AS WELL. AVRIL: WHAT IS IT ALL GOING TO MEAN FOR EMERGING MARKETS? SPREADS ARE TIGHT. AT SOME POINT DO YOU GET THE SENSE THAT THINGS MIGHT TURN? >> SPREADS HAVE NOT MOVED IN EMERGING MARKETS BUT OBVIOUSLY THE BASE RATES HAVE MOVED SIGNIFICANTLY. SO THAT IS GOING TO BE A SIGNIFICANT DOWNWARD HIT TO DEMAND IN EMERGING MARKETS. AVRIL: THANK YOU SO MUCH, GREAT TO CHAT WITH YOU. THANK YOU AGAIN FOR YOUR TIME TODAY. THE CHIEF ECONOMIST OF THE IMF. HASLINDA: GOOD TO SEE YOU, ARE VERY ON AVRIL HONG ON THE SIDELINES AT THE IMF AND WORLD BANK MEETINGS IN BANGKOK. STILL TO COME, MIKE CANNON BROOKES JOINS US EXCLUSIVELY ON THE COMPANIES'S PUSH TO AI, THE CHALLENGE FROM CHATGPT AND CLAUDE AND WHAT THE TRANSFORMATION MEANS FOR ENTERPRISE SOFTWARE. KEEP IT HERE WITH US. THIS IS BLOOMBERG. HASLINDA: WELCOME BACK. WE'RE COMING TO YOU LIVE FROM THE BLOOMBERG NEW ECONOMY FORUM HERE IN NEW DELHI. A SHARP SELLOFF IN GLOBAL AND CHIP STOCKS IS UNDERWAY. THE KOSPI PLUNGING 7% AS WE SPEAK AND INVESTORS REASSESSING THE OUTLOOK FOR THE AI BOOM. THE LATEST TRIGGER, WARNING FROM A CEO THAT FINANCING, NOT CHIPS, MAY BECOME THE BIGGEST CONSTRAINT ON AI EXPANSION. LET'S BRING IN OUR MARKET REPORTER ANTHONY STEPHENS. PUT IT IN PERSPECTIVE FOR US. ANTHONY: IT'S A TOUGH DAY ACROSS THE ASIAN SEMICONDUCTOR SPACE. IT FOLLOWS THE WEEK SESSION IN THE U.S. INTO HYPER-SCALERS, BANKS AND CONSUMERS. ASIA IS HEAVILY RATED TO THE BIG CAPEX BASE, MOST NOTABLY IN KOREA. TO A LESSER EXTENT, KOREA CONTRIBUTING VERY MUCH, TAIWAN GETTING ACELA, DOWN 2%, JUST SHY OF THE 8000 NUMBER LOCALS WERE WAITING FOR. AGONIZINGLY SHORT OF THE NUMBER JUST AS LOCAL LEVERAGE HIT RECORDS. THEY WILL OBSERVE -- ABSORB FOREIGN SELLING. CLIFF THE BOARD AND YOU CAN SEE ANOTHER MARKET IN A DIFFERENT PLACE AND THAT IS INDIA. INDIA HAS BEEN KIND OF THE NEGATIVE, WE WILL NOT BE SEEING THIS KIND OF DROP IN INDIA. THE OVERNIGHT INDICATION IS FLAT, DESPITE A HIGH INFLATIONARY NUMBER AT 5.5% INFLATION NUMBER. WE ARE WELL ABOVE THE RBIS BUT WE DID OUTPERFORM IN THE ADR SESSION OVERNIGHT. THAT'S BECAUSE INDIA HAS BEEN LAGGING FOR SO LONG AS THE ECONOMY LOOKS TO FIND ITS FOOTING IN THE NEW AI PARADIGM. YOU CAN SEE HOW BADLY IT HAS DONE. THIS KIND OF LAGGARD PLAY WILL BE WATCHED IN THE EARNINGS SEASON, WE SEE IT CLOSE A LITTLE BIT AND THAT COULD BE COMING INTO PLAY IN THE BACK HALF OF THIS YEAR. HASLINDA: OUR MARKETS REPORTER ANTHONY STEPHENS THERE FOR US. HALF A WORLD AWAY, AUSTRALIA'S TECHNOLOGY SECTOR IS GRAPPLING WITH MANY OF THE SAME ISSUES AS ANTHONY WAS TALKING ABOUT. LET'S TAKE A LOOK AT HOW THEY ARE TRYING TO GET A BETTER ADVANTAGE. A COFOUNDER AND CEO SPENT MORE THAN SHAPE -- MORE THAN TWO DECADES SHAPING HOW AI WORKS. HE JOINS US NOW EXCLUSIVELY FROM THE LION CITY. GOOD TO HAVE IT WITH US. LET'S TALK ABOUT THAT, WHEN IT HAPPENS, YOU USE $250 MILLION OF YOUR OWN MONEY TO BUY BACK YOUR SHARES. WHAT DO YOU THINK WALL STREET MISUNDERSTOOD ABOUT THE WHOLE SITUATION AND HOW VULNERABLE CONFLICTS REALLY ARE? >> THANK YOU VERY MUCH FOR HAVING ME. WE ARE DOING EXTREMELY WELL, WE HAVE ACCELERATED FOR A NUMBER OF QUARTERS IN A ROW. ARE AI DRIVEN PLATFORM IS REALLY BIG -- BEING TAKEN UP BY CUSTOMERS ALL AROUND THE WORLD. I'M HERE IN SINGAPORE VISITING A NUMBER OF CUSTOMERS ACROSS THE REGION AND OUR SOLUTIONS, OUR PRODUCTS AND PLATFORM HELP COMPANIES TO ADOPT AI IN TERMS OF HOW IT COMES OUT INTO THEIR TEAMS COME INTO THEIR KNOWLEDGE WORKERS AND ACTUALLY BECOMES PART OF THEIR BUSINESS PROCESSES IN THE WAYS THEY WORK. CUSTOMERS THAT USE OUR AI SOLUTIONS GROW AT TWICE THE RATE OF THOSE THAT DON'T. SO I THINK WE ARE JUSTIFYING THAT AI IS A HUGE TAILWIND AND ONE OF THE BEST THINGS EVER HAPPEN TO OUR COMPANY IS THE NEW TECHNOLOGIES AND TOOLS WE HAVE TO SOLVE THE SAME PROBLEMS FOR OUR CUSTOMERS TEAMS IN BETTER WAYS. HASLINDA: THE THING IS, CLAUDE, AN AGENT LIKE CLAUDE CAN BUILD CUSTOM WORKFLOWS. WHY SHOULD COMPANIES BE PAYING YOU MILLIONS AND MILLIONS OF DOLLARS? >> THERE'S A LOT OF A GENTING HARNESSES THAT ARE VERY GOOD. I USE ONE OF THEM MYSELF TO HELP US BUILD AND IMPROVE OUR SOFTWARE APPLICATIONS. FUNDAMENTALLY IT HELPS TEAMS OF PEOPLE COLLABORATE IN ORGANIZATIONS ALL AROUND THE WORLD. SERVICE TEAMS, BUSINESS TEAMS, STRATEGY LEADERSHIP TEAMS AND TECHNOLOGY TEAMS, THOSE TEAMS OF PEOPLE USE MANY DIFFERENT APPLICATIONS, PUT THEM TOGETHER AND WHAT WE HAVE IS A BIG PART OF OUR PLATFORM WHICH IS THE CONTEXT GRAPH OF ENTERPRISE KNOWLEDGE ON HOW WE TAKE ALL THE HISTORY OF DECISIONS AND DOCUMENTS AND INFORMATION THE COMPANY AND PUT IT TOGETHER INTO A CONTEXT GRAPH SO WE CAN GET BETTER ANSWERS TO CLAUDE OR ANY A GENTING HARNESSES BEING USED. SO WE HAVE A BIG PARTNERSHIP WITH ANTHROPIC, OPENAI, AND GOOGLE, BRINGING THE ENTERPRISE KNOWLEDGE OF THOSE PROCESSES AND THE HISTORY OF DECISION-MAKING, IF I CAN'T UNDERSTAND WHY YOU MADE A DECISION AS A TEAM OR GROUP IN YOUR COMPANY, AND 2019, YOU CAN NOW MAKE THE BEST DECISIONS IN 2026 OR 2027. YOUR AGENTS CERTAINLY CAN UNDERSTAND THAT. SO WE HELP COMPANIES TAKE THAT INFORMATION AND CONNECTED INTO THE TEAMWORK GRAPH AND PROVIDER TOOL WITH AGENTIC HARNESSES WHILE AT THE SAME TIME HAVING A HUMAN EXPERIENCE OF HOW AGENTS AND PEOPLE WILL WORK TOGETHER. HASLINDA: MIKE, YOUR NAVIGATING ONE OF THE MOST IMPORTANT TIMES OF THE COMPANY. YOU RECENTLY CUT ABOUT 1600 OF YOUR WORKFORCE, ABOUT 10%. WHAT IS THE TIPPING POINT THAT LED YOU TO MAKE THAT DECISION? >> OBVIOUSLY THOSE ARE ALWAYS VERY HARD, CHALLENGING DECISIONS, PART OF THE JOB IS NAVIGATING AND MAKING THE RIGHT DECISIONS. IN THAT CASE, WE NEED TO RAPIDLY CHANGE AS A COMPANY, IT WAS VERY CLEAR AT THE TIME. THE AI PART OF OUR BUSINESS IS DOING VERY WELL AND GROWING VERY FAST. THE ENTERPRISE PART OF OUR BUSINESS DEALING WITH THE WORLD'S LARGEST COMPANIES LIKE LU BERG IS A FANTASTIC CUSTOMER, MANY OTHER VERY LARGE CUSTOMERS AROUND THE WORLD ARE GROWING VERY FAST. SO WE NEED TO CHANGE INSIDE THE COMPANY TO INVEST EVEN MORE HEAVILY IN THOSE AREAS THAT ARE DURING REALLY WELL IN TERMS OF AI AND THE SKILL BASE. THAT IS A PART WE ARE STILL GROWING AS A COMPANY INCREDIBLY STRONGLY. WE GREW 29% REVENUE LAST QUARTER ON HER QUARTERLY REVENUE RATE. EVEN AT THE SCALE WE ARE AT, WE ARE ACCELERATING AS A COMPANY AND CONTINUES TO DO SO DUE TO THE AI TAILWINDS WE HAVE IN TERMS OF HOW WE'RE HELPING COMPANIES AND THEIR TEAMS BE MORE EFFECTIVE ACROSS ALL THE BUSINESS PROCESSES. HASLINDA: I WANT TO TAKE A LOOK AT THE TECH SPACE AS A WHOLE, THE IPO'ING PERFECTED HER -- IN PARTICULAR. WHAT IS YOUR READING ON IT, YOU BEEN QUITE VOCAL ON THE POOR QUALITY OF TECH IPOS. >> I DON'T KNOW ALL THE DETAILS, I TEND TO STICK TO MY LANE AND THINGS I FOCUS ON AND OBVIOUSLY WE ARE HERE DEALING WITH CUSTOMERS AS A GOOD EXAMPLE. I THINK COMPANIES THAT HAVE A REALLY DEEP TECHNOLOGICAL FOUNDATION ARE ABLE TO NAVIGATE THESE TIMES AND THESE CHANGES. CERTAINLY THE LESS WE SPEND TIME FOCUSING ON OUR TECHNOLOGICAL FOUNDATIONS OVER THE LAST THREE OR FOUR YEARS NOW IN THE AI ERA, THE APPROACH WE'RE TAKING IS WE HAVE TO CREATE OUR WAY THROUGH IT. WE HAVE TO CREATE NEW TECHNOLOGIES AND LEVERAGE ALL THESE TECHNOLOGIES TO BUILD NEW VALUE FOR CUSTOMERS WITH ALL OF THESE AMAZING TOOLS THAT WE HAVE ACCESS TO AN TERMS OF AI AND THE MODELS AND HOW WE BRING IT TO CUSTOMER VALUE. I WOULD SAY IT'S ABOUT HAVING A DEEP TECHNOLOGY CORE, AT LEAST FOR US. OTHER COMPANIES CAN DO THEIR OWN THING. HASLINDA: IS PRETTY INTERESTING THAT THE FUND MANAGERS AT HOME BALKED AT THE VALUATION OF $44 BILLION. IS? ? THIS A HEALTHY DEVELOPMENT PEOPLE ARE BEGINNING TO QUESTION THE AI SPACE AND THE TECH SPACE AND THE AMOUNT OF MONEY THAT'S BEEN PLOWING INTO THAT SPACE. >> AGAIN, I CAN ONLY COMMENT FROM THE VIEWPOINT OFASEAN. IS FABULOUS TO SEE THEIR SUPPORT THROUGHOUT THE YEAR AS WE'VE GONE THROUGH INTERESTING MARKET TIMES AS A BUSINESS OURSELVES. AT THE SAME TIME, IT'S WONDERFUL TO SEE THE UNDERSTANDING OF THE PRODUCTS WE BUILT AMONG BOTH THE AUSTRALIAN FUND MANAGEMENT COMMUNITY AND ACROSS THE U.S. INVESTORS. I SPENT OR TIME WITH EUROPEAN INVESTORS, I THINK THE ATTITUDE TO TECHNOLOGICALLY DRIVEN SOFTWARE COMPANIES IN THE AI ERA HAS CHANGED BECAUSE THE ECONOMICS OF SOFTWARE, IS STILL A FANTASTIC BUSINESS. ALL OF THAT LET'S US GROW CUSTOMER VALUE FASTER AND WHERE ACCELERATING OR BUSINESS FOR THAT REASON BECAUSE OF OUR INVESTMENT IN TECHNOLOGY AND DELIVERING FOR OUR CUSTOMERS. IT'S GREAT TO SEE THE INVESTMENT COMMUNITY AROUND THE WORLD VALUING THAT. HASLINDA: THAT TAKES US QUITE NICELY INTO WHAT IS HOT AND WHAT IS NOT. THERE HAVE BEEN CALLS FOR US TO SLOW DOWN AI DEVELOPMENT. WHAT IS YOUR TAKE ON THAT? >> FROM OUR POINT OF VIEW, WE LOVE MOTTO PROGRESS. OUR JOB IS TO TAKE MORE PROGRESS AND HARNESS IT FOR CUSTOMERS. WE ARE BUILDING IN THE SOFTWARE LAYER, WE ARE BUILDING SOLUTIONS FOR CUSTOMERS THAT TAKE THE AI MODEL PROGRESS AND HARNESS IT FOR THE VALUE OF THE CUSTOMER, SOLVING THE PROBLEMS THAT THE CUSTOMERS HAVE. IF IT'S OUR JOB TO COMBINE DIFFERENT MODELS, WE HAVE MORE THAN 75 DIFFERENT MODELS AND PRODUCTION, TO GIVE THE CUSTOMER THEIR OWN SET OF CHOICES AND DIFFERENT VALUES. PROGRESS IS A GREAT THING BECAUSE WE CAN SOLVE EVERMORE PROBLEMS, AND AS THE MODELS MOVE FORWARD, IS NOT JUST THE LATEST MODELS, THE MORE MATURE MODELS ARE GREAT THING FOR US AT THE SAME TIME BECAUSE AS A TECHNOLOGY WORLD SHOWS UP TO COST OPTIMIZE ALL THE MODELS, WE CAN DELIVER EVER-INCREASING VALUE A PRICES FOR OUR CUSTOMERS, WHICH IS REALLY IMPORTANT, THAT AI CAPITAL MANAGEMENT IS A CONCERN FOR ALL CUSTOMERS. WE LET YOU REDUCE YOUR TOKEN USAGE PROPORTIONALLY AS IT INCREASES. SO IT'S A VERY SIGNIFICANT SAVINGS FOR OUR CUSTOMERS, ACCESSING KNOWLEDGE FROM ANY OF THOSE AI HOUSES THAT ARE OUT THERE. HASLINDA: MIKE, TALK TO US ABOUT YOUR EXPANSION PLANS. WE KNOW YOU HAVE QUITE A BIG OPERATION HERE IN INDIA. >> WE DO, YES. JUST PAST 40 STAFF HERE IN SINGAPORE AND HIRING STRONGLY ACROSS THE REGION. SOUTHEAST ASIA AND INTO CONTINENTAL AND NORTH ASIA, ALL ARE BIG AND VERY FAST-GROWING MARKETS FOR US. SINGAPORE AT THE MOMENT IS ONE OF OUR FASTER GROWING MARKETS IN THE REGION. INDIA IS ONE OF OUR THREE BIG OFFICES. WE HAVE STAFF AND PROBABLY 18 OR 19 COUNTRIES AROUND THE WORLD AT THE MOMENT AND 26 OUT OF THE 27 STATES IN INDIA. WE HAVE A BIG OFFICE IN BANGALORE BUT IT HAS BEEN A BIG SUCCESS STORY OF AUSTRALIAN-INDIAN COOPERATION, THE TWO COUNTRIES WORK CLOSELY TOGETHER. WE HAD GREAT SUCCESS THERE, GROWING IN THE REGION AND WE ARE THERE FOR THE TALENT. IT'S AN INCREDIBLY DEEP TALENT BASE. WE DO FUNDAMENTAL ENGINEERING, THE THINGS I JUST SPOKE ABOUT ARE BUILT OUT OF THE INDIAN OFFICE IN COLLABORATION WITH AUSTRALIA AND AMERICA. WE COULD REALLY RUN A 24/7 OPERATION AROUND THE WORLD, FINDING THE BEST TALENT WHEREVER WE CAN FIND IT. INDIA HAS A LOT OF FANTASTIC TECHNICAL TALENT SO IT HAS BEEN A REAL SUCCESS STORY FOR US. I WAS THERE JUST LAST MONTH. HASLINDA: I WANT TO TALK ABOUT THE AI MODELS, INCREASINGLY THE U.S. IS ASKING THE WORLD TO CHOOSE BETWEEN THEIR MODELS AND THE CHINESE MODELS. PERHAPS ENTERPRISES WILL BECOME MORE COMFORTABLE IN USING THOSE MODELS, THE LIKES OF DEEPSEEK. PRETTY CONTROVERSIAL STATEMENT TO MAKE AT THIS POINT IN TIME. WHAT REALLY ARE YOUR THOUGHTS ON IT? >> I THINK WE DO BELIEVE IN CUSTOMER CHOICE, SO CUSTOMERS ARE SEEING THE VALUE IN AI, BEYOND PROTOTYPES AND PILOT PROGRAMS, DEEPLY EMBEDDING IT INTO THEIR BUSINESS PROCESSES. SEE THAT EVERY SINGLE DAY. AS THEY DO SO, THEY HAVE A NEW COST MANAGEMENT EXERCISE, IN THEIR BUSINESS WORKFLOW AND TECHNOLOGY TEAMS, HOW THEY MANAGED THE AI COSTS THAT ARE RISING. SOME HAVE VERY STRONG VIEWS ON WHERE MODELS HAVE COME FROM. OTHERS ARE MORE FLEXIBLE AND TAKE ADVANTAGE OF BLENDING DIFFERENT MODELS. DATATHAT'S ABSOLUTELY PART OF THE CONCERN. I THINK OVERWEIGHT MODELS ACROSS THE WORLD ARE PICKING UP STEAM. WE HAVE A NUMBER OF FINE TUNED NEBO -- NEMO TRON MODELS. I THINK OPEN-WEIGHT MODELS PROP -- BROADLY ARE GROWING. WE HAVE A QUESTION AROUND WHERE THOSE MODELS COME FROM, AND CUSTOMER PREFERENCES OF THAT. WE SEE IS SHIFTING SLOWLY AS IT BECOMES A COST EQUATION. AND THE CONTENT OF THE OPEN-WEIGHT MODEL IS MORE UNDERSTOOD. I THINK WE WILL CONTINUE TO BE CUSTOMER LED ABOUT THAT. MODEL PROGRESS, MODEL COMPETITION IS A GREAT THING, BECAUSE WE CAN DELIVER BETTER SOLUTIONS FOR OUR CUSTOMERS AT A BETTER PRICE. AND MORE MAGICAL AI OUTCOMES ACROSS THE PLATFORM. WE ARE EXCITED BY ALL OF THE MODEL PROGRESS AND COMPETITION HAPPENING TO INCREASE QUALITY AND BRING PRICES DOWN OF EVERY TOKEN. HASLINDA: BUT MIKE, IT IS ABOUT COMPLIANCE, NATIONAL SECURITY. WHAT DO YOU TELL GOVERNMENTS AND ANTI-PRIZE CLIENTS WHO ARE KEEPING AWAY FROM THE CHINESE MODELS BECAUSE OF THESE CONCERNS? MIKE: I THINK IT IS TOTALLY THEIR CHOICE. IF THEY UNDERSTAND THE TRADE-OFFS THEY ARE MAKING. THEY ARE MAKING A TRADE-OFF AROUND COST, RISKS, ABSOLUTELY COMPLIANCE, DATA SOVEREIGNTY. UNDERSTANDING WHERE YOUR DATA IS BEING USED AS A COMPANY, MEANING ALL OF THE REGULATIONS OF YOUR COUNTRY OR INDUSTRY. ALWAYS IMPORTANT AND TOP OF MIND FOR CUSTOMERS. OUR JOB WITH THOSE PLATFORMS IS TO SUPPORT ALL OF THOSE REQUIREMENTS, WHETHER THAT IS SOVEREIGNTY AND DATA RESILIENCY IN EUROPE. WE JUST SHIPPED INFERENCE RESIDENCY LAST WEEK AND OUR CONFERENCE IN AMSTERDAM. THE INFERENCE ON ALL OF THOSE LATEST FRONTIER MODELS FOR EUROPEAN CUSTOMERS ARE BEING ROLLED OUT TO BE DONE IN EUROPE. NOT BEING DONE IN THE U.S. EVEN IF THE DATA WAS LIVING IN EUROPE. IT IS IMPORTANT FOR CUSTOMER CHOICE TO BE THERE. OVER TIME, THE MODEL BLENDING IS BECOMING MORE AND MORE IMPORTANT. YOU ARE SEEING A LOT OF MODELS TAKING THAT A OPEN-WEIGHT MODEL, ADJUSTING IT, CHANGING IT, AND ROLLING IT OUT. WE HAVE TO BE CAREFUL ABOUT THE STACK OF TECHNOLOGIES WE HAVE, JUST AS WE DO FOR ANY OTHER AREAS, WHETHER IT IS YOUR OPERATING SYSTEM, IS IT OPEN SOURCE OR NOT OPEN-SOURCE. I THINK CUSTOMERS ARE MAKING SMART CHOICES. BEING VERY THOUGHTFUL. HAVING HAD SOME CONVERSATION WITH THE SINGAPORE GOVERNMENT HERE, THE SAME THING. PEOPLE ARE THINKING AHEAD AND TRYING TO MAKE THOUGHTFUL CHOICES. IT'S EXCITING TO SEE HOW IT WILL ALL DEVELOP. HASLINDA: DEFINITELY. IT WILL BE EXCITING TO SEE, INTERESTING TO SEE. IT IS AN AI RACE BETWEEN THE U.S. AND CHINA. IF YOU WERE TO HAZARD A GUESS WHO IS LIKELY TO WIN THE RACE, WHAT WOULD DEFINE SUCCESS? MIKE: LOOK, I THINK COMING FROM AUSTRALIA, THE GLOBAL COMPETITION FOR BUILDING BETTER MODELS, THE EXCHANGE OF TECHNIQUES AND THE ABILITY TO PUSH MODEL PROGRESS FORWARD IS GOING TO BE A COMPETITION FOR US. WE HAVE EUROPEAN MODELS, OTHER PEOPLE IN NEW PLACES, CONSTANT INNOVATIONS IN MODEL BUILDING TECHNIQUES. XAVIER BECERRA, HOW THEY ARE OPTIMIZED, HOW THEY ARE DISTILLED. A LOT OF THINGS HAPPENING AT A RAPID PACE. I THINK IT IS PROBABLY, IF YOU LOOK BACK AT THE LAST TWO YEARS, NAIVE TO CHOOSE WINNERS. I DON'T THINK FROM A BUSINESS PERSPECTIVE, THERE NEEDS TO BE THE CASE THERE THERE ARE MANY WAYS TO HARNESS THE COLLECTIVE OF MODEL PROGRESS. MOST CUSTOMERS WE HAVE CERTAINLY HAVE A LARGE-SCALE AND HAVE MULTIPLE MODELS RUNNING INTERNALLY. THEY ARE NOT CHOOSING JUST ONE. THEY ARE CHOOSING MULTIPLE MODELS OFF OF DIFFERENT PURPOSES. I THINK WE LIVE IN A MULTI-MODEL WORLD. DIFFERENT COST PROFILES, DIFFERENT OPPORTUNITIES. OBVIOUSLY THEY NEED TO THINK ABOUT DATA COMPLIANCE OF THEIR OWN BUSINESS NEEDS. THEY WILL HAVE A HANDFUL OF HARNESSES AND I THINK THEY WILL HAVE A COUPLE LARGE-SCALE CONTEXT PROVIDED FOR THOSE MODELS. I WOULD SAY TO ANY BUSINESS OUT THERE, BE EXCITED BY MODEL PROGRESS AND MAKE SURE YOU ARE THOUGHTFUL ABOUT HOW YOU CAN HARNESS THE PROGRESS TO GET THE BEST OUT OF YOUR PROCESSES AND BUSINESS. HASLINDA: GREAT INSIGHTS. DO COME BACK. MIKE CANNON-BROOKES, COFOUNDER AND CEO OF ATLASSIAN. AMONG THE PANELISTS DISCUSSING THE END OF PREDICTABILITY. JOINING HIM, BLACKSTONE PRESIDENT JONATHAN GRAY AND FORMER U.K. PRIME MINISTER RISHI SUNAK FOR A CONVERSATION ON NAVIGATING AN ERA OF UNCERTAINTY AND DISRUPTION. LET'S LISTEN IN. >> IT IS THE LEADER OF -- BUILDING ON ITS STRENGTH AND I.T. SERVICES, AUTOMOTIVE ENGINEERING AND HEAVY INDUSTRY TO ENTER SEMICONDUCTORS, ADVANCED ELECTRONICS MANUFACTURING, ELECTRIC MOBILITY AND DIGITAL PLATFORMS. LYNN EXTRAORDINARY TRIO OF MINDS TO TACKLE THIS PROVOCATIVE CONCEIT, THE END OF CREDITABILITY. GENTLEMEN, I'M EFFECTIVELY MAKING THE CASE WITH THE TITLE OF THIS PANEL THAT WE ARE LIVING IN A NEW, FUNDAMENTALLY LESS PREDICTABLE AND MORE VOLATILE ERA, WITH A WIDER RANGE OF POTENTIAL OUTCOMES. EVERYONE HERE KNOWS THAT YOU HAVE MANAGED THROUGH UNCERTAINTY BEFORE, OR RECESSION, TECHNOLOGICAL CHANGE, EVERY GENERATION THINKS IT'S MOMENT IS UNIQUELY UNCERTAIN. RIGHT? IF YOU WERE AROUND FOR THE OIL EMBARGO OF 1973, THE GULF WAR OF 1991, THE FINANCIAL CRISIS IN 2008, WHAT I WOULD LIKE TO KNOW AND I WOULD LIKE TO START WITH YOU, CHANDRA, WHAT IS DIFFERENT ABOUT THIS MOMENT IN HISTORY? >> FIRSTLY, THANK YOU FOR HAVING ME ON THE PANEL. FIRST, I THINK WE HAVE HAD A GOOD LAST FOUR OR FIVE DECADES. BUT IF YOU LOOK AT A GROUP LIKE OURS, WHICH IS ABOUT 160 YEARS OLD, YOU HAVE SEEN TWO WORLD WARS, THE PANDEMICS. AND YOU HAVE SEEN HIGH LEVELS. MANY THINGS THAT WE HAVE SURVIVED. IT'S NOT THE FIRST TIME THAT SOMETHING LIKE THIS IS HAPPENING. THE PRIMARY DIFFERENCE IS ALL OF THIS IS HAPPENING AT THE SAME TIME. THAT GEOPOLITICAL RECEPTION, THE AI DISRUPTION. AND COMMODITY PRICES. THE WORLD HAS BECOME SO ADVANCED AND SO CONNECTED, YOU ARE TRYING TO DECOUPLE IT. TACKLING ALL OF IT AT THE SAME TIME IS THE UNIQUE THING NOW. >> JOHN? >> IT'S GREAT TO BE HERE IN DELHI. >> GREAT TO HAVE YOU. >> THANK YOU. I WOULD SAY WE OBVIOUSLY HAVE TWO LIVE WARS IN RUSSIA AND UKRAINE, AND IN THE MIDDLE EAST WITH IRAN AND ITS PROXIES. WE OBVIOUSLY HAVE AN ENVIRONMENT THAT HAS GOT MORE VOLATILITY. WE SEE THE U.S. WITH MORE TENSION WITH ITS ALLIES. ALTHOUGH, I THINK THERE ARE ENOUGH SHARED VALUES THAT WE WILL ULTIMATELY GET THROUGH THIS. I THINK THE BIGGEST THING, WHEN WE LOOK BACK IN HISTORY, LOOK BACK 10 OR 20 YEARS FROM NOW, WILL BE THE TECHNOLOGY. BECAUSE I THINK THAT'S THE THING THAT IS GOING TO DEFINE THIS ERA. THAT WE ARE MOVING FROM A PLACE LIKE WE DID IN THE U.S. FROM 1870 TO 1900 WITH THE INDUSTRIAL REVOLUTION, THAT WHEN YOU BRING THIS SUPER INTELLIGENCE TO THE ENTIRE WORLD, THAT IT'S GOING TO PROFOUNDLY CHANGE HOW WE LIVE, HOW CONSUMERS LIVE, HOW BUSINESSES ARE IMPACTED, AND HOW GOVERNMENTS OVERSEE SOCIETIES. TO ME, THAT IS THE BIG THING. THAT'S THE BIGGEST CHALLENGE. THESE OTHER THINGS ARE MAKING BUSINESS MORE UNCERTAIN AT TIMES. BUT I THINK WE WILL FIND A WAY TO PLOW THROUGH THAT. I THINK IT IS THE TECHNOLOGY THAT IS THE HARDEST. >> IT IS ALL OF THOSE THINGS WHERE ABOUT THE OVERLAY OF TECHNOLOGY. JONATHAN: WHEN WE LOOK BACK, I THINK THAT'S WHAT WE WILL TALK ABOUT, WHERE THINGS ARE CHANGING. >> I SEE YOU NODDING YOUR HEAD. PM SUNAK: YES, THANKS FOR HAVING ME. GOOD TO BE HERE WITH TWO DEAR FRIENDS OF MINE BUT I HAVE HAD THE PRIVILEGE OF WAR -- PRIVILEGED TO WORK WITH. CHANDRA AND JOHN ARE RIGHT. YOU MENTIONED THE 70'S AND EVERY GENERATION THINKING THEY ARE IN A DIFFERENT PLACE. I HAVE THE GREAT PRIVILEGE OF WELCOMING HENRY KISSINGER TO COME AND SPEND TIME IN THE U.K. BEFORE HIS 100TH BIRTHDAY. I HAD EXACTLY THE CONVERSATION WITH HIM. HE IS A STATESMAN THAT HAD BEEN THROUGH ALL OF THESE INCREDIBLE PERIODS OF OUR GLOBAL HISTORY, HELPED SHAPE THEM. NUCLEAR WEAPONS, ARMS RACE. I SAID TO HIM, THIS IS REALLY CHALLENGING, I'M GRAPPLING WITH ALL OF THESE PROBLEMS. EXPECTING HIM TO GIVE ME SOME VERSION OF LOOK, YOU KIDS DON'T KNOW ANYTHING. WE HAD TO DEAL WITH REAL PROBLEMS. SURPRISINGLY TO ME, HE DIDN'T SAY THAT. HE ENDED UP DISCUSSING WITH ME INTERNATIONAL RELATIONS, HISTORY TELLS YOU THAT WHEN YOU MOVE FROM ONE SYSTEM OF PREDICTABILITY TO A NEW SYSTEM, YOU HAVE A PERIOD OF TRANSITION WHICH IS OFTEN VERY UNPREDICTABLE AND ABILITY. THAT IS THE PERIOD WE ARE IN NOW. WE ALL GREW UP INVESTING IN, OPERATING IN MULTILATERAL RULES-BASED FRAMEWORK. LARGELY ENFORCED BY U.S., UNIPOLAR STRENGTH. THAT IS OVER. PRESIDENT TRUMP IS NOT THE CAUSE OF THAT AND HE IS A SYMPTOM OF THAT. THE WORLD WE ARE IN NOW IS ONE WHERE WE DON'T QUITE KNOW WHAT WE HAVE SETTLED DOWN TO. THAT CREATES AN ENORMOUS AMOUNT OF GEOPOLITICAL UNCERTAINTY AND DANGER. CHINA IS A PEER COMPETITOR FOR THE U.S. ACROSS ECONOMIC, MILITARY AND TECHNOLOGICAL DOMAINS. THAT IS A NEW FEATURE OF THE WORLD ECONOMY. COUNTRIES LIKE INDIA, LIKE THE GULF, NOW ARE ABLE TO CHART THEIR OWN COURSE. THEY ARE NOT GOING TO ALWAYS AGREE WITH THE U.S. OR CHINA. THEY WILL DO WHAT THEY WANT, AND THAT IS A NEW FEATURE. I THINK IT IS NO COINCIDENCE THAT RIGHT NOW, THERE ARE MORE ARMED CONFLICTS HAPPENING THEN AT ANY POINT SINCE WORLD WAR II. 61 DIFFERENT STATE BASED ARMS CONFLICTS AROUND THE WORLD. I LOOK AT THAT AND I MORE RIGHT. I THINK PRESIDENT TRUMP PROBABLY LOOK AT THE -- LOOKS AT THAT AND THINGS, 61 OPPORTUNITIES TO WIN A NOBEL PEACE PRIZE. [LAUGHTER] I THINK THAT SHOULD CONCERN US. HIS DEPUTY CHIEF OF STAFF SAID SOMETHING INSTRUCTIVE ABOUT THE ENVIRONMENT. HE SAID, WE ARE LIVING IN A WORLD GOVERNED BY FORCE, GOVERNED BY STRENGTH, GOVERNED BY POWER. NOW, I THINK THAT WORLDVIEW IS PROBABLY A LITTLE BIT EXTREME, BUT WE ARE CERTAINLY LIVING IN AN ENVIRONMENT WHERE HARD POWER MATTERS. AND STATES, AS BOTH JOHN AND CHANDRA KNOW, HAVE REALIZED THEIR ECONOMIC SECURITY IS INDIVISIBLE FROM THEIR NATIONAL SECURITY AND TECHNOLOGICAL STRENGTH, WHICH IS CREATING A WORLD OF UNPREDICTABILITY. >> WHAT WE ARE TALKING ABOUT IS A COCKTAIL OF RISKS. TO THINK OF IT IN THOSE TERMS. THERE ARE FACTORS AND VARIABLES BEYOND YOUR CONTROL. GEOPOLITICS IS A RISK. TECHNOLOGICAL DISRUPTION, OBVIOUSLY A RISK. BAD POLICY IS A RISK. . CLIMATE EVENTS ARE A RISK. MARKET DISLOCATIONS ARE A RISK. WHAT I WOULD LIKE TO KNOW FROM EACH OF YOU IS THIS. WHICH OF THOSE RISKS OR PERHAPS A RISK I DID NOT MENTION, DO YOU FIND HARDEST TO MANAGE? AND WHICH WORRIES YOU THE MOST? PM SUNAK: WHAT WORRIES ME IS THE TECHNOLOGY THAT JOHN TALKED ABOUT IS COMPLETELY EXTRAORDINARY. WE ARE ON THE CUSP OF A GENERAL-PURPOSE TECHNOLOGY. AI IS OFTEN COMPARED TO THE INDUSTRIAL REVOLUTION. I THINK THAT UNDER SELLS IT. I THINK OF IT AS THE INDUSTRIAL REVOLUTION COMBINED WITH THE ENLIGHTENMENT, OF INVENTION AND DISCOVERY OF NEW IDEAS, COMBINED WITH THE PRINTING PRESS WHICH DEMOCRATIZED KNOWLEDGE AROUND THE WORLD. THIS TRIFECTA WILL BE EXTRAORDINARY. IT WILL RAISE THE FLOOR FOR HUMANITY. WE TALKED ABOUT THAT IN INDIA AT THE AI SUMMIT. ON THE KNOLOGY BRINGS WITH IT NEW RISKS. WHAT TECHNOLOGY DOES IS LOWER THE BARRIER OF ENTRY FOR BAD ACTORS. THAT'S WHAT THIS TECHNOLOGY DOES. I THINK OUR JOB AS POLICYMAKERS IS TO GET AHEAD OF THAT, PROVIDE SAFEGUARDS AND A FRAMEWORK SO WE CANNOT ONLY PREVENT BAD THINGS FROM HAPPENING BUT BRING ALONG THE PUBLIC WITH US WHO COME OUTSIDE OF PLACES LIKE INDIA, CHINA AND THE GULF ARE DEEPLY DISTRUSTFUL OF THIS TECHNOLOGY. IF WE DON'T REASSURE THEM, WE WILL NOT GET ALL OF ITS BENEFITS. PUT ASIDE THE GEOPOLITICS. WE WILL MANAGE THAT. THE TECHNOLOGY IS THE THING THAT WE WILL BE TALKING ABOUT FOR YEARS TO COME. >> THEY ARE NOT THE SAME THING, RIGHT, THE THING YOU WORRY ABOUT THE MOST AND THE THING YOU FIND HARDEST TO MANAGE? IT SOUNDS LIKE IT IS THE SAME THING FOR RISHI. CHANDRA: I THINK HE IS RIGHT. IN THE NEAR TERM. TECHNOLOGY, BOTH IN TERMS OF WHAT IT WILL DO AT THE HANDS OF BAD ACTORS, AND ALSO THE LABOR RESEARCHING THAT HAS TO HAPPEN IN THE NEAR TERM. IT'S GOING TO BE A BIG DEAL. MEDIUM TO LONG-TERM, IT WILL BE POWERFUL, IT'S GOING TO MAKE THE WORLD BEAUTIFUL. HIGHLY IMPACTFUL. THE OTHER THING I WORRY ABOUT IS THE WAR SITUATION. I THINK WE SEEM TO BE OPENING WARS ON EVERY FRONT. AND NOTHING IS GETTING CLOSED. I DON'T KNOW. SOMEBODY WANT TO PRESS A BUTTON? >> WE SHOULD ALL BE WORRIED ABOUT THAT. CHANDRA: I WORRY ABOUT THAT A LOT. >> JOHN? JONATHAN: THIS IS POSITIVE, RIGHT? I GUESS I DEFINITELY AGREE ON BOTH OF THESE FRIENDS IN THE TECHNOLOGY WHICH I HIGHLIGHTED. BUT SINCE RISHI COVERED THAT, I WILL TALK ABOUT ANOTHER RISK. HASLINDA: COMING UP, WE LOOK AT THE OUTLOOK FOR INDIA'S PHARMA INDUSTRY AS IT NAVIGATES THE THREAT OF U.S. TARIFFS. WE WILL BE JOINED BY OUR GUEST TO DISCUSS WHAT -- WHERE THE INDUSTRY IS FINDING NEW OPPORTUNITIES. KEEP IT HERE WITH US. THIS IS BLOOMBERG. ♪ HASLINDA: WELCOME BACK. YOU ARE WATCHING "INSIGHT." COMING TO YOU LIVE FROM THE BLOOMBERG NEW ECONOMY FORUM IN NEW DELHI. A BARRAGE OF ATTACKS IN SAUDI ARABIA HAS INTENSIFIED PRESSURE ON WASHINGTON TO STEP UP EFFORTS TO HELP ITS ALLY. THE DEVASTATING STRIKES ON RIYADH'S MAIN AIRPORT OVER THE WEEKEND KILLED AT LEAST 16 PEOPLE INCLUDING A U.S. CITIZEN. IT IS POORLY TIMED FOR TRUMP AND HIS PARTY WHICH ARE FACING TOUGH MIDTERM ELECTION PROSPECTS. AFTER THE IRAN WAR RAISED OIL PRICES AND FUEL COST OF LIVING WORRIES AT HOME. WITH A GEOPOLITICAL TENSIONS AND TRADE UNCERTAINTY RESHAPING THE PHARMACEUTICAL INDUSTRY, INDIA'S PIRAMAL PHARMA IS EXPANDING ITS R&D FOOTPRINT. THE COMPANY RECENTLY OPENED A NEW MICROBIOLOGY LAB IN THE U.S., EVEN AS A NAVIGATES THE RISK OF HIGHER INPUT COST FROM A PROLONGED MIDDLE EAST CONFLICT. LET'S GET THE OUTLOOK FROM CHAIRPERSON NANDINI PIRAMAL, JOINING US EXCLUSIVELY HERE AT THE BLOOMBERG NEW ECONOMY FORUM. GOOD TO HAVE YOU WITH US. IN OUR EARLIER CONVERSATIONS, YOU TALKED ABOUT HOW YOU ARE CONCERNED ABOUT THE PROLONGED IRAN WAR BECAUSE IT MEANS HIGHER INPUT COSTS. HERE WE ARE, THE WAR IN ITS EIGHTH MONTH. HOW IS IT IMPACTING COSTS? NANDINI: OVERALL, I WOULD SAY PHARMA DOES A LOT OF OIL DERIVATIVES SUCH AS PLASTICS. WE ARE ULTIMATELY ORGANIC CHEMISTRY. WE ARE SEEING THAT. WE ARE TRYING TO WORK WITH OUR SUPPLIERS AND OUR CUSTOMERS TO SEE WHAT WE CAN DO TO MANAGE THEM AND MAKE SURE WE CAN LIMIT THE IMPACT. OVERALL, I WOULD SAY THE HIGHER OIL COST DOES HAVE AN IMPACT ON PHARMA. HASLINDA: WHEN IT COMES TO RAW MATERIALS, SOME SAY WE ARE SEEING AN INCREASE BETWEEN 30% TO 100%. HOW IS IT LIKE FOR YOU? NANDINI:NANDINI: IT DEPENDS ON WHAT THE INPUT IS. AND HOW YOU CAN MANAGE THAT. YES, WE ARE SEEING SOME OF THOSE HIGHER OIL COSTS TRANSLATE INTO HIGHER PRICES FOR RAW MATERIALS. HASLINDA: COULD WE SAY EVENTUALLY THE COST WILL HAVE TO BE BORNE BY THE CUSTOMERS? NANDINI: EVENTUALLY. RIGHT NOW, WE ARE DOING A COST SHARING THING BETWEEN US AND OUR CUSTOMERS. NOT ALL CUSTOMERS ARE WILLING TO ACCEPT PRICE INCREASES. I THINK EVENTUALLY, IT'S GOING TO HAPPEN. HASLINDA: WHAT OIL PRICE, DO YOU THINK, YOU MIGHT MAKE THE TOUGH DECISION? IT IS ALREADY AT $105 PER BARREL. NANDINI: I THINK WE WILL HAVE TO SEE HOW IT TRANSLATES INTO THE RAW MATERIALS. IT'S A DAY TO DAY BASIS. WE ARE TRYING A LOT OF DIFFERENT WAYS WITH OUR SUPPLIERS TO KEEP PRICES DOWN. I THINK IT IS A BALANCE. HASLINDA: IS THAT RESHAPING OR SHAPING THE WAY YOU LOOK AT YOUR EXPANSION? NANDINI: I THINK I STILL BELIEVE IN THE U.S. PHARMA INDUSTRY. WE ARE EXPANDING IN THE U.S., WE ARE EXPANDING OUR LEXINGTON FACILITY. BUT I DON'T THINK IT IS JUST THE U.S. ALONE. I THINK IT IS THE AND, NOT AN OR. I THINK INDIA COULD BE A GOOD SUPPLIER TO THE U.S. AND THE WORLD. WE DO HAVE MANUFACTURING TALENT. AND CAPACITY THAT IS DIFFERENT THAN CHINA. I THINK ONE OF THE THINGS THAT WE WORKED REALLY HARD ON IS LIMITING OUR EXPOSURE TO CHINA. WE HAVE GOTTEN IT DOWN TO SINGLE DIGITS, IN TERMS OF THAT. EVEN WHAT WE HAVE FROM CHINA, WE TRY TO MAKE SURE WE HAVE GOT THREE CONTINENT SOURCES. WE DUBAI FROM CHINA, BUT IT IS NOT BEING DEPENDENT ON CHINA. WE ARE TRYING VERY HARD TO SAY THAT INDIA CAN BE A GOOD PARTNER FOR THE U.S., BECAUSE IF WE LOOK AT WHAT WE WANT TO DO, WE WANT TO BRING PHARMA PRODUCTS TO CUSTOMERS. IT WOULD WE WANT TO MAKE THEM AVAILABLE, AND AT A REASONABLE COST. THE U.S. IS MUCH MORE EXPENSIVE THAN CHINA. AND INDIA. YOU NEED THAT BALANCE. HASLINDA: IS IT CONCEIVABLE THAT ONE DAY, YOU WILL NOT RELY ON CHINA AT ALL? RIGHT NOW, SOME OF THE APR ARE STILL CHINA DRIVEN. NANDINI: AS I SAID, WE ARE TRYING HARD TO REDUCE IT. THERE MAY BE SOME BASIC CHEMICALS THAT ARE HARD, AT THIS POINT AT THE PRICE, TO GET OUTSIDE. BUT WE ARE DOING OUR BEST. HASLINDA: INCREASINGLY, THE WESTERN WORLD WANTS TO SEE A FULL ECOSYSTEM WITHIN THEIR OWN COUNTRIES. IT MEANS U.S. FOR U.S., EUROPE FOR EUROPE. HOW ARE YOU THINKING ABOUT THAT AND WHAT DOES IT MEAN TO COST EVENTUALLY? NANDINI: WE HAVE MANUFACTURING IN THE U.S., IN THE U.K., AS WELL AS INDIA. WE ARE QUITE BALANCED. AT THIS POINT, THE CAPACITY TO MAKE LARGE-SCALE DRUGS DOES NOT NECESSARILY EXIST. SO THERE IS A SCARCE CAPACITY IN THE U.S. IF YOU WANT TO MOVE EVERYTHING TO THE U.S. IN THE SHORT-TERM, I DON'T KNOW WHERE YOU WILL FIND THE CAPACITY. AND THAT IS TO BE AN INCREASE IN COST. I DO SEE PEOPLE MOVING SOME THINGS TO THE U.S. WHERE IT MAKES SENSE. BUT EVENTUALLY -- YOU CAN'T MOVE EVERYTHING. HASLINDA: HOW ARE TARIFFS IMPACTING HOW YOU OPERATE? NANDINI: THE TARIFFS ARE A CHALLENGE, OF THE SECTION 232 TARIFFS ON INDIA RIGHT NOW WHICH SAYS IF YOU ARE MAKING PATENTED DRUGS THAT DON'T HAVE, FOR A CUSTOMER THAT DOES NOT HAVE A MOST FAVORED NATION STATUS OR ON ENSURING EXEMPTIONS, IT IS 100%. THAT'S HARD FOR ANY OF OUR CUSTOMERS TO SOLVE. AND IT DOES HAVE AN IMPACT. IT WILL HAVE AN IMPACT ON US, IN THE LONGER TERM. BECAUSE THOSE KIND OF DECISIONS WILL BE MADE IN INDIA. HASLINDA: AS YOU LOOK AT THIS UNCERTAINTY, WHETHER IT'S OIL PRICES OR GEOPOLITICS, WHAT'S THE BIGGEST CONCERN FOR YOU? IN THE NEXT 24 MONTHS? NANDINI: I THINK IT'S THE UNCERTAINTY. I THINK THE METAPHOR RISK IS A CHALLENGE AND WE HAVE TO MANAGE IT THE BEST WE CAN. HASLINDA: NANDINI PIRAMAL, CHAIRPERSON OF PIRAMAL PHARMA. MUCH MORE COMING UP FROM THE BLOOMBERG NEW ECONOMY FORUM HERE IN NEW DELHI, INCLUDING THE ADDRESS BY INDIAN PRIME MINISTER NARENDRA MODI. HORIZONS MIDDLE EAST & AFRICA IS UP NEXT. KEEP IT HERE WITH US. YOU DON'T WANT TO MISS THE SHOW. THIS IS BLOOMBERG. ♪