Blackstone CEO Stephen Schwarzman said there will be disruption due to tariffs but believes the world will adapt. While there may be a period of uncertainty that impacts markets in the short term, this is likely a temporary phase, he said during an interview with Network18's group consulting editor Bodhisatva Ganguli. He spoke on topics ranging from US President Trump's tariffs to India's role in the new global economic order to impact of artificial intelligence. Edited excerpts:
There is currently global disruption and uncertainty caused by tariffs going up and down in the US. What are your views on that? How does one navigate this? Will this sort of die down? Is this a short-term situation? And the new administration will get its bearings.
Well, I think it's pretty clear that there's been a change and tariffs are on the table. The reason for that is the prospect of countries having equal access to each other, which is a good theory of the case. And so it will take a while for that to work its way through. But I think the world will be able to absorb those types of changes and then we'll move on. There'll be some period of uncertainty, which is what's prompting your question, which should affect markets over the short term. But I think this is a short-term phenomenon. There's a shared cost between people who make goods, people who buy goods, and the system should accommodate all of that.
You worked closely with President Trump, especially in his first term. India is about to negotiate a trade deal with the US. One doesn't know exactly how much time it will take. What would you advise India's political leadership to do when they approach negotiations with President Trump's administration?
I'm not a government official but as somebody who knows almost all the people involved I can say that Prime Minister Modi and President Trump had a very good meeting, which is a great start, and they have agreed to have a trade agreement between the two countries. so I think that the baseline for India seems to me to be very good as There's a lot in common. favorable attitude of each country to the other one. And I think you just sort of start with the discussion. Evidently, there's already been a number of adjustments that the two countries have made. So I know there's always a high level of anxiety whenever anybody brings this subject up. But I think the quality of your leadership in India and the ability to reach agreements should be very good.
There is the China plus one strategy which most global companies are following. Now India sees itself as the obvious plus one although there are competitors like Vietnam. Do you see India's name coming up as a possible substitute for China when it comes to global supply chains?
Well I think it's been a difficult time period for China. Right. They will go through some adjustments. But at the moment India has become sort of top of mind for the business community as an alternative. That's a great opportunity for India. I think it's important that India capitalize on that opportunity. It's got low-cost labor, smart people. It's got some challenges with logistics and internal infrastructure compared to China. But there's a curiosity about India now. You must look at it. If you're a corporate executive, that's manufacturing offshore. And so it should work out quite well for India.
Blackstone entered India in 2005 and now you have more than one trillion of assets worldwide. India is still just about 5% of that. Is there a number that you can give us to our viewers in terms of how this number can go up? Can 5% become 10% or 15% over what kind of period of time?
When we decided to come here, we announced that we would put $1 billion in India. People here probably forget that 20 years ago, that was a huge number. And we were on the front pages of all the newspapers. And now, as you say, we're many times what we expected to be, because the country is such a great place to operate.
So, India happens to be your number one performing market in the world for Blackstone?
We've spent our time building businesses in India to make India better. We foresee being able to double where we are, to have a total exposure of $100 billion at some point in the future. We're rapidly growing here in India. We're the largest foreign company in the country. We're the largest owner of real estate in the country. We're the largest private equity firm here in all kinds of interesting areas. And we found that operating in India is great, and we're very bullish on the future of the country.
In these years that you've been here, has it generally become easier to do business in India in terms of the regulatory environment? And more importantly, what are the changes that you would like to see?
Well, it has gotten easier. It was pretty difficult for a foreigner 20 years ago. And we had some investments that didn't work out as well. What we did is we learned how to work here, and the country changed as well. But what we learned is that we were best off owning businesses ourselves and being able to control the direction and success so we can build really successful businesses. We learned that just being minority partners wasn't to our taste. It's not what we do in other places in the world. It was done 20 years ago a lot, and we just defaulted to what we were comfortable doing. Growth rates at that time were in the 9% area, now in the 6.5% area—that's amazing growth by global standards.
You are the country's largest landlord. You also have a large presence in the healthcare industry in the recent past. What are the other sectors that you could get into? Would you get into areas like data centers, or consumer-enabled internet companies?
Actually, our biggest exposure here, and where we want to do more, is in technology. Blackstone is the number one developer of data centers in the world. We're also the number one owner of data centers. And this is just the start of the data center industry for India. We can see very substantial growth as artificial intelligence becomes much more widespread. Healthcare is also important. Given the size of the population in India, we have the second-largest hospital group in the country, among other things, and we can see more growth in that area as well.
Since we have the honor of having you here, it would be remiss not to ask a few questions about what's happening around the world in the global economy. There are two narratives—one that we are on the cusp of a perhaps AI-driven productivity boom, coupled with the deregulation that President Trump has promised. What are your views on that?
AI is something I've been deeply involved with since 2015, and I ended up making a philanthropic gift to MIT, which is our largest technical university, for their College of Computing. And so, even though I'm not a technologist, I hang around people who are at the cutting edge of that technology. What they have believed since I got involved, and what they believe even more strongly now, is that it's going to be a transformative technology.
We're just starting to see it. It's similar to the invention of electricity—nobody knew what to do with it at first, other than using it for a light bulb. And now, we use electricity for virtually everything—whether it's your air conditioner, refrigerator, washer, or, you know, all kinds of activities. And so, we're just starting to develop applications for artificial intelligence, and there are some people who believe that in five to seven years, there's going to be a huge jump-start when we get to what's called AGI, artificial general intelligence.
There are going to be a lot of changes as a result—some will be very good. The conventional wisdom is that the invention of drugs that help keep us alive will increase by at least three times. And it is much cheaper to develop drugs while you're producing at a much higher volume. Education will change with individualized learning that can be delivered worldwide. This is particularly important for countries with low GDP per capita, people who don't have much money, or those without great education systems. There will be a variety of transformations.
On the negative side, there will likely be changes in employment. There could be job losses, and certain functions may become automated. But there's also a risk that criminals, who as a rule aren't so smart, could become smarter with AI. And there is the risk of AI being used by rogue states. So, it's a technology that needs careful control over time. But the prospects for wonderful achievements for human beings are definitely there.
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