On Episode 925 of The Core Report, financial journalist Govindraj Ethiraj talks to Harsh Gupta Madhusudan, Fund Manager & Chief Equity Strategist at Ionic Wealth, a part of Angel One.

SHOW NOTES

(00:00) The Take

(04:50) Markets Are Savouring The Return Of FIIs And Hope

(07:20) India Exports To The UK Are Quite Low And Low Market Share Alone Does Not Signal A Big Opportunity.

(10:11) Garments Offer The Biggest Opportunity In India’s Exports To The UK But Other Areas Need Work.

(12:53) A Structural Long Term View On The Markets.

(27:40) The AI World Is Surprising Us By Hiring Graduates Of A Discipline You Would Have Never Dreamt Of.

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NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

Good morning, it's Monday, the 13th of July, and this is Govindraj Ethiraj, broadcasting and streaming weekdays from Mumbai, India's financial capital, and most recently host to Matt Damon, Christopher Nolan, and Tom Holland, who arrived in the city for a premiere of the film, Homer's Odyssey, and had chai, bun-maska, and some light snacks, according to reports, at a restaurant called Olympia, quite suitably in Colaba, in South Mumbai.

The Take

Years ago, a senior executive at Hindustan Unilever, then called Hindustan Levers, told me that the odds of an external candidate parachuting into the chairman's seat were almost nil. Responding to my off-the-record query regarding succession, a perennial source of intrigue in India's corporate circles, he was unequivocal.

We consistently build and promote our internal pipeline, he explained, noting the premium that the multinational Levers places on organisational continuity. HUL's legendary management trainee programme operates as a corporate crucible. By the time an executive ascends to the apex, they've typically traversed global markets and acquired a panoramic view of the consumer landscape.

The talent factory is so prolific that hundreds, if not more, of successful chief executives in recent times can trace their lineage back to the company, including, most recently, Chanel's CEO, Lina Nair, who spent some 29 years in Unilever, of which at least 20 seem to be in Mumbai. It's a testament to the virtues of cultivating leadership diligently in times of calm. Contrast this with another prominent conglomerate currently experiencing severe turbulence in its talent pipeline.

Air India, the Tata Group's flagship aviation turnaround, is finding itself rudderless at a critical juncture. Following the resignation of CEO Campbell Wilson, who will depart well ahead of his 2027 contract, Tata Sun's chairman N. Chandrasekharan has resorted to, what I would think, a classic corporate stopgap, which is a committee. This interim panel of senior executives, according to reports, which includes Mr. Chandrasekharan himself, is tasked with ensuring continuity.

But there is irony here. A chairman whose own tenure extension at Tata Sun's remains a subject of polite speculation is now presiding over the continuity of an airline whose future is considered turbulent in the best of days. The holding company, grappling with its own labyrinthine leadership dynamics, is overseeing an unlisted carrier still struggling to shed the bureaucratic sclerosis of its state-owned past.

A committee is a poor substitute for a captain, particularly when flying through a storm. Now, Air India has faced a barrage of crises over the past year. Route deviations following border clashes between India and Pakistan earlier on in 2025, the tragic crash of a Boeing 787 Dreamliner going from Ahmedabad to London just a month later, and soaring jet fuel costs exacerbated by a geopolitical conflict this year.

Add to this the monumental challenge of integrating a disparate workforce and retrofitting a decrepit fleet that routinely draws the ire, particularly, of long-haul passengers. Even senior pilots reportedly harboured deep misgivings about the carrier's operational resilience. While external shocks have been impacting airlines globally, Air India's internal succession pipeline is evidently clogged.

The promotion process appears to have stalled, leaving two reported frontrunners in limbo, Nipun Agarwal, the Chief Commercial Officer, and a former banker, and Vinod Kanhan, the former head of Vistara. Now, the decision is mired in complexity. Singapore Airlines, which holds a 25% stake, would rightly demand a say, and possibly aligning the joint venture partners on this is causing some delays.

Furthermore, importing seasoned aviation talent from overseas is fraught with the friction of securing Indian security clearances. But the larger lesson here is one of corporate governance. Does a conglomerate double down on succession planning only when facing headwinds, or does it devote disproportionate time to it during periods of calm? Unilever has arguably always chosen the latter, ensuring a steady hand is always waiting in the wings.

There are surely many more such companies, interestingly, within the Tata Group itself, who have strong pipelines. But Air India, burdened by its past and paralysed by boardroom indecision, is learning the hard way that an airline navigating severe turbulence cannot be flown by committee. It requires a single decisive hand at the yoke.

And that brings us to the top stories and themes...

The stock markets are savouring the return of foreign institutional investors.

India exports to the United Kingdom are low, and low market share alone does not signal a big opportunity. But governments offer the biggest opportunity here.

A structural long-term view on the markets as seen by a specialist investor

The AI world is surprising us by hiring graduates of a discipline you would have never thought of.

Markets, West Asia and Oil

The markets could open softer on Monday, though would likely be enthused by the news that foreign portfolio investors are now buying more consistently, and more importantly, not dumping stock as they have been for the last two years or so.

After four straight months of selling, foreign portfolio investors have turned buyers of Indian equities in July, investing more than a billion and a half so far this month, thanks to various factors including a relatively stable rupee and improving domestic macroeconomic indicators. Prior to this selling spree in the last four months, the last time foreign portfolio investors had invested net was in February, with investments over about two and a half billion dollars. So the question now, of course, is how will markets react to the latest round of hostilities between the United States and Iran that's over the weekend, not as negatively as before, possibly because the expectation still continues to be that of a march towards peace of some sort.

In keeping with the somewhat positive sentiment, including the return of the foreign institutional investors on Friday, the Nifty 50 and Sensex extended their rally. The Sensex was up 828 points to 77,569 and the Nifty 50 was up 244 points to 24,206. The broader markets saw the Nifty mid-cap and small-cap also rising 1.4 and 1.55 percent each.

To return to West Asia, a quiet weekend is perhaps too much to expect as Iranian and US forces attacked each other, one attack by Iran at a ship for a barrage of bomb runs by the United States. So where oil will start today is anybody's guess. Quite likely it will rise, but at least partially, which in turn could weigh on stock prices.

Oil prices were lower on Friday after the latest round of Iran-US fighting, as traders stayed hopeful that shipping would eventually resume in the state of Hormuz, though according to some reports even right now ships are passing through despite Iran claiming otherwise. Brent futures were at about $76, a battle down about 30 cents on Friday. But there are some other concerns around oil.

There are unplanned refinery outages in both Russia and the United States that have squeezed fuel supplies, according to a Reuters report. Pump prices are up in the US again, though that does not really matter to most others, maybe even in the US itself. Russia's refining sector has been disrupted thanks to repeated attacks by Ukraine, which have reduced fuel production and worsened shortages.

Russia has curbed diesel exports and boosted gasoline imports, tightening global fuel supplies and lifting prices, according to Reuters.

How can the India-UK FTA be successful for Exporters?

The India-UK Comprehensive Economic and Trade Agreement, or new opportunities for Indian exporters, but gains will vary sharply by sector, according to a detailed research analysis by the Global Trade Research Institute. The analysis is instructive, not just for the United Kingdom, but for also some of the other FTAs that are lined up, including with the European Union, in terms of what it will finally manifest on the ground.

According to the GTRI report, the strongest prospects will be in the labour-intensive goods, processed foods, seafood, automobiles, and selected manufacturers. Steel, petroleum, and alcohol are not likely to gain significantly, but the numbers show substantial room to grow. In 2025, the UK imported about $930 billion of goods from the world, but only $15 billion from India.

So India's share of UK imports was only 1.6%. The UK, meanwhile, bought only 3.4% of India's $445 billion of global exports. Importantly, and thus, low market share alone does not signal a big opportunity. Export potential, says the GTRI, depends on four factors.

In this case, UK demand, India's export capacity, current UK market presence, and the tariff advantage created by CETA, which as you can see comes at the end. Standards, food safety rules, safeguards, certification, and supply chain constraints can also matter as much as tariffs, says GTRI, that here garments will be the biggest winners. India exported about $16 billion globally in 2025.

The UK imported about $21 billion of which India supplied about $1.3 billion or 6% of UK imports. The UK already buys about 8% of India's global garment exports, showing or suggesting strong buyer relationships. GTRI says removal of high apparel tariffs can improve India's position against preferential competitors and quickly generate new orders.

Textiles, leather, and footwear also stand out. In the case of footwear, the UK accounts already for about 10% of India's global footwear exports. These sectors, combined with established commercial links with meaningful tariff cuts, make them amongst the most immediate CETA opportunities, says that report.

Processed foods is another opening. The UK imported about $33 billion globally, of which only $350 million or so came from India, which means a 1% market share. India's global exports were about $10 billion.

Similarly, cereals, vegetables, fruits, and spices also have strong potential. India only supplied about $716 million or 3.1%. Fish, meat, and processed products show a large market gap. India supplied only about $126 million, only 0.7% of UK imports.

Seafood also offers potential, but the challenge is compliance with UK SPS rules, residue controls, and traceability. So, automobiles, motorcycles, and parts present perhaps the biggest numerical opportunity, says GTRI. The UK imported about $92 billion globally, but only $325 million from India, giving India a 0.4% share.

India's own global exports were at about $25 billion. There are other sectors like chemicals and pharmaceuticals, which have strong Indian supply capacity but limited CETA-led gains because of regulation, quality compliance, environmental rules, and procurement, all of which matter more than tariffs. Similarly, on the flip side, iron and steel products show why an FTA does not automatically guarantee market access.

India exported about $20 billion globally and supplied only about $950 million to the UK, giving it a 5.2% share. Again, in the UK, the tighter steel safeguard regime, reduced quotas, and high above-quota tariffs can overwhelm CETA preferences. Trade remedies and future carbon costs could add further risks.

Alcohol and wine, says the GTRI, has a different problem. The UK imported about $10 billion, but only about $7 million went from India, and India's own global exports were only about $450 million. So what is it all adding up to? The gap reflects weak export scale, limited brand presence, and strong global competition rather than tariffs.

The biggest gains are likely when three conditions come together, says GTRI. India has strong export capacity, UK substantial demand, and CETA removes a meaningful tariff disadvantage. Right now, all of this points more favourably to garments, textiles, leather, footwear, processed foods, seafood, and some farm products.

GTRI recommends that food exporters do need better testing, traceability, and compliance with UK sanitary and phytosanitary rules. Machinery and electronics firms need certification technology and stronger buyer links, while automobile exporters must meet rules of origin and technical requirements. To sum up, CETA creates market access, not guaranteed exports.

This, of course, once again, is a sign of what we should or should not expect from other FTAs. Therefore, without parallel work on standards, certification, logistics, regulatory approvals, and buyer networks, much of that opportunity could remain on paper, says the GTRI.

What is Airtel’s Growth Strategy in its next Phase?

Bharti Airtel, which is India's second-largest telecom services provider, has said it will focus on data centres, cloud, and financial services for its next phase of growth, according to the company's chairman Sunil Mittal in its annual report.

Having invested about 330,000 crores over the past decade in building digital infrastructure, he said Airtel's investments will harness new growth engines for the country, backed by resilient and secure digital infrastructure.

What are the structural long-term view on the markets?

The last few weeks have offered some early rays of hope of a market turning around, battered as it has been by foreign institutional investors selling, among other factors. If that indeed is the case, what are some of the longer-term views for the markets looking like and the sectors within that, particularly from a specialist fund manager's point of view? I spoke with Harsh Gupta Madhusudhan, author, fund manager, and chief India strategist at Ionic Wealth, a part of AngelOne, and I began by asking him to tell us about his fund and his role there.

INTERVIEW TRANSCRIPT

Harsh Gupta Madhusudan: I'm Fund Manager and Chief Equity Strategist, Bhuvan, at Ionic Wealth by Angel One. So I wear two hats. I run a fund called India Ionic Pipe Fund, which is a long-term, low-churn, concentrated fund.

As the word pipe would probably hint to you, it's like the private equity inspiration, but in public markets. And especially in a PMS context, it also makes a lot of tax-efficient sense. I am also the Chief Equity Strategist, so I talk to all our UHNI clients and help them understand the Indian markets and macro, and they should allocate more to India, where, if at all, in my fund or in any other fund in an open architecture sense.

So I wear both the buy side and sell side hat, so to speak.

Govindraj Ethiraj: Got it. If you were to now look at where the markets are right now, we've seen a bit of a turn in the last couple of weeks for potentially two or three reasons. One, of course, there's been a definite chill on the wall, but apart from that, the macroeconomic signals are mostly sustained all through this.

And there could be a few other factors like portfolio investors coming back, and we've already seen that in bonds, we may see that in equity as well. So what in your mind is contributing to the floor in this market at this point?

Harsh Gupta Madhusudan: Two major things happened in the last four to five weeks. I think 5th June was the big measures that RBI took, along with the Government of India on the FCNR ECB side, and the Government of India removing the taxes on interest and capital gains for foreign investors in Indian sovereign bonds. So I think that kind of put a floor or rather a ceiling numerically on the rupee.

So the rupee, we can discuss separately, I think is an extremely undervalued currency right now. There is a structural angle, there is a cyclical angle. But nonetheless, in the short term, there was a bit of a speculative attack.

Speculative not in a ill-meaning sense, but importers kind of hoarding dollars, exporters not converting into rupees on the NDF side offshore, etc. So basically, a bunch of bad news from tariffs to wars to energy, led to people being more conservative, which led to an attack on the rupee, which led to dollar returns of the Indian market being low. Simultaneously, the whole AI thing has been playing out, valuations, etc., which peaked out in September 24. So I think all of that has kind of reached a crescendo, and in your language, a floor on the valuation. So blue chips today at 2021 times trailing earnings, and even June quarter results are not even out yet, except ECS and one or two. So earnings are finally coming decent and double digit growth.

More importantly going, I feel like nominal GDP, which is a good proxy for top line rather than the bottom line for corporate India, is coming in strong double digits. And you can kind of triangulate that or proxy that with bank credit growth growing at 17-18% for a few weeks and months now. And just a year ago, it was growing around 8 or 9%.

So bank credit growth is back. Top line growth is back. We can see that in some direct tax numbers as well.

Good power demand, although that is partly the weather. So economic numbers are good. The war situation has receded, although we saw a bit of a bounce back in tensions last couple of days.

Crude went, in fact, imported crude, which is more Dubai rather than Brent in India, went from 145-150 to the 60s two or three days ago. So crude price halved over a couple of months. The sense of crisis has receded.

At the same time, because of the Supreme Court and other kind of institutional constraints on Donald Trump, it seems like some form of Indo-US trade deal will finally be reached after a year and a half. Over and above the UK deal being operationalised, the EU deal being operationalised by the end of the year. So all in all, there is just a lot of good language.

And the final trigger, I suspect, is the market getting very, very, though it could be a bit premature, about the whole global AI trade in the US, as well as the picks and shovels trade in Korea and Taiwan, which are, according to me, misdiagnosed as part of MSCI EM, for example. I mean, they're richer in per capita terms in Japan. But there are some institutional reasons why they are part of the EM index, and now the two largest rates in the EM index.

So it's a combination of factors which are going against India in the last 12, 18, 24 months, which have started going in favour of India. Currency, valuations, growth, the AI factor on the margin, war, tariffs, and that has given a flow to the market. And I'm actually quite, I mean, in the short term, it's always a mugs game, but I'm quite constructive from a short to medium term as well, over and above the medium to long term.

Govindraj Ethiraj: Got it. So let me pick on two things. One is rupee and the other is oil prices.

We have been tracking oil prices, inversely, of course. I mean, when they go down, we go up. So the shift or the hit has been relatively muted in the latest round, when oil prices went up to $178.

Are you getting a sense that we are freeing ourselves from the clutches of oil, so to speak, or oil prices?

Harsh Gupta Madhusudan: The import intensity of crude, both in terms of barrels per unit of real GDP or in terms of percentage of GDP in dollar rupee terms, has been coming down. So I think that is actually a global phenomenon, that your incremental growth tends to be more domestic services heavy, even for a manufacturing nation, et cetera, like China. Plus, there is, of course, a whole slow energy transition, quite rapid in larger historical terms, but slow as we speak.

Overall global crude demand has stabilised around 100 million barrels per day, give or take. So I think crude, within a certain range, I would say until high double digits, is not a really big irritant for the Indian growth story as such. And remember, in 2005, a $50-$60 would be like $80-$90 inflation adjusted today.

And that was not seen as extremely excessive. And at one point in January 2008 or so, we had reached up to $130 on Brent and WTO and so on. So I think you're absolutely spot on on that point.

Govindraj Ethiraj: And on currency, you said you've been giving that some thought. Some of the other economists I speak to feel, while the rupee seems to be stronger and is likely to remain so, but it still may not, let's say, breach 93 or so.

Harsh Gupta Madhusudan: Yeah. So in the very short term, again, very difficult to say. I think what's happening is, and we'll see with a bit of a lag, that RBI is letting its forward short book expire a bit, right?

So I think it had gone up to $110-$115 billion of a forward short book by May or so. My sense is that number could be in the $80s billion, like maybe $20 billion less or so right now as you speak. That's one of the reasons why it went to almost $97 on 20th May.

Then it came down to around $93-$94. And it's now back to $95-something when this kind of short-term increase in tensions happened again. Now again, they're saying they're talking.

So let's see what happens. But the broad incentives of Donald Trump and the Iranians are very clear. The Iranians want money.

Donald Trump wants no major action till the midterms in November. So my sense, if you take a step back and look at the rupee, the last three years, the current account deficit was $20-odd billion each year. So the rupee depreciation story was not a trade or a current account story.

It was a capital account story. Strong domestic flows, foreigners selling for various reasons we've already discussed. At the same time, we became maybe slightly complacent that we did not open the bond market fast enough.

At the same time, you're buying a lot of gold, for example, which comes technically on the current account, but is more of a capital account in the substance of it. So all of that combined led to your net FDI and FPI becoming cumulatively negative. So even though the current account deficits are very, very small by historical standards, you know, half percent of GDP or so.

Remember, taper tantrum 2013 was 5% of GDP when we had fragile 5, 12 years, 13 years ago. So it was basically even those residual flows at a net level, not at a gross level, going to negative. So what the RBI has done and what the government has done is basically given a big booster shot that you'll get roughly say 100 billion dollars in the next 12, 14 months through ECB, FCNR, bonds, maybe we enter the Bloomberg Global Aggregate Index, etc., which in turn lets importers, exporters and other speculators and hedgers kind of back off because they now see the rupee not actually going to triple digits and therefore they can go back to more normal schedule of hedging. So the kind of extra demand over and above the current account deficit, which was basically a result of panic, also kind of starts to die down.

So in that sense, God knows whether it goes below 93 or not in the very short term, but if we take a slightly more medium term sense and remember, the dollar cycle has also been going up for 13, 14 years since 2011-12. And we are now seeing the early signs of it turning down in the US RER sense. So I have every reason to believe that actually we are very, very close to a peak pessimism on the rupee as we speak.

Govindraj Ethiraj: Got it. So this is the backdrop, if we can call it that. So how are you now looking at some of the sectors and where do you feel there's more opportunity compared to maybe others?

Harsh Gupta Madhusudan: I think you kind of spelt it out perfectly. If this is the backdrop, then at least from a top down perspective, some things logically follow, right? You need to be more in discretionary, less in staples.

You need to be more in financials and to some extent cyclicals, more in kind of less in defensive place. So that's how basically I've been kind of creating my portfolio much more heavy in financials. I think large private sector banks are looking extremely, I think, in terms of their price to book valuations.

I told you the bank credit growth is high. Capital market themes are looking very interesting. Auto and auto ancillaries are looking very, very impressive.

And various idiosyncratic bottom of discretionary ideas. So basically not extremely heavy on pure export ideas. You want to be right now more constructive on financials.

You want to be more constructive on discretionary. You want to be selectively constructive on some cyclicals and you want to be less constructive on pure export stories. You want to be less constructive on your defences or staples.

So that's my broad sense in terms of sectoral allocations. If I go more into details, I really like auto and auto ancillaries. I think where India has played industrial policy before it became cool to talk about industrial policy again, they've done it very well over the last 30 or 35 years.

Unlike, for example, consumer electronics, where we are now catching up with PLI, etc. So I think we have some core strengths in auto and auto ancillaries. As our domestic consumption increases of four wheelers, what happened with two wheelers will happen with four wheelers.

That when you have a soft demand here, your residual production becomes feedstock for global exports to the global south. So like now we let's say produce 6 million cars and we say buy five and we are getting close to a million cars in exports. We've already done that in two wheelers, right?

So of course, you have to keep up with the whole electrification theme there. I think that's a big one. I think, of course, defence as well as energy transition are evergreen themes.

But we just have to be careful about the prices we pay there. So there it's more a question of buying on dips or rather when the sector is temporarily not in the news that much. That's when you want to look at the sector a bit more.

The logic is very simple. As you grow richer, discretionary income grows faster than your overall income. It's the opposite of Engel's law.

Staple consumption falls as a percentage of your income, even though it increases in absolute amounts. Sky is the limit. Now if you go to like some random examples like sports entertainment consumed by IPL, if you go to theme parks, if you go to other forms of luxury or entertainment, I mean the delta with China and the US is not 2x or 3x, it's 10x, 20x, in some cases, two orders of magnitude.

So there are some kind of good bottom up idiosyncratic options. I think travel and tourism also comes under the broad umbrella where there is long, long secular growth still ahead of us. So I think there are some very good players by now who've gone through hell and back in COVID and all of these tests.

They are very experienced players and the overall formalisation roll up potential in the Indian economy. So many people go to some unorganised hotel in some temple town for religious pilgrimage. That can, for example, come to either a ginger under tata or a lemon tree.

I'm not recommending any companies. I'm just giving an example. So in that sense, if you just run per capita numbers of these things compared to China, forget America, it's just a huge gap.

So if you believe in the India story, which again is more of a macro conviction, then you have some very nice bottom up ways to play it. And the good thing about that is in a pipe kind of portfolio, which I'm running, you don't have to worry too much about the short term in that sense. So if your conviction is very clear, you can kind of go beyond the quarters noise and just buy companies that you think are likely to do very well.

Giving a small example, India buys 60 times fewer EVs than China, 6-0, four wheeler EVs, because the overall number of cars you buy is 6x less. And the EV slash strong hybrid penetration is 10 times less. So 6 into 10, 60 times, right?

And the same population. And there may be 15, 20 years ahead of us. So then you can run the CAGRs, you can see who are the leading players, you can kind of back calculate, do your own CT tests and so on.

Govindraj Ethiraj: Right. You said that you are not liking or you're not focused too much on pure export themes. Why is that?

Harsh Gupta Madhusudan: Absolutely nothing against exports. As I said, if you are strong in manufacturing and auto or auto ancillary, inevitably a large portion of your production will end up in exports. In fact, I would see that's a good sign, which tells me you're globally competitive, right?

It's a good market discipline test. But if you're a pure exporter player, it depends on, of course, sector to sector. Genetic pharma is different from some speciality chemicals, et cetera.

In my experience, that first of all, I am relatively more constructive or bullish on the rupee. The IT sector also falls there and the whole transition, maybe it's a bit overdone right now, the panic, but structurally there are issues. And in my sense, there is no sector that India can be very good at in pure export terms, which would not consume domestically, right?

So it's a very strange kind of firm that would not be selling that item domestically. So I think a hybrid is a good option, but a pure or 80 to 90% export orientated play is something that I'm slightly nervous about. Either the Chinese may double down on industrial policy in that sector, a particular kind of speciality steel, for example, a particular kind of speciality chemical.

Whereas if you are tethered to India's domestic growth or domestic kind of long-term story, I can give you a slightly higher multiple without losing sleep.

Govindraj Ethiraj: That's a good note to end on, Harsh. Thank you so much for joining me.

Harsh Gupta Madhusudan: Thank you, Govind. It's my pleasure.

Why Philosophers are Important for AI

The AI world is surprising in more ways than one. An Economist article says that 10 years ago, as the AI revolution was gathering pace, arts and humanities students were told that if they wanted to make themselves employable, they should learn to code. That, the Economist now says, may have been bad advice.

These days, it's programmers who are nervous about AI taking their jobs, and they might consider learning to philosophise. Earlier this year, the Federal Reserve Bank of New York published figures showing that American philosophy graduates are more likely to have jobs than their peers who studied computer science. For 2024, the most recent year for which numbers are available, 7% of those who studied computer science were unemployed, against 5.1% of philosophers, many of whom are being snapped up by AI firms themselves, says the Economist, with students getting job offers before they have graduated.

Academics are moving too, with one academic describing the scale of departures from philosophy departments as a haemorrhaging. Some of the lessons, says the Economist, that philosophy can offer AI researchers are ancient. The Socratic method, as described by Plato, an ancient Greek philosopher, uses feigned ignorance and sequential questioning to clarify meanings, spot contradictions, and reveal ramifications.

Many current AI systems tend towards psychophancy. And models trained in the Socratic method, according to one expert who spoke to the Economist, are less keen on people-pleasing and more willing to pursue the truth. And then there is the idea of Socratic ignorance.

In the Apology, Plato has Socrates claim that his wisdom consists mostly of being aware of how much he does not know. Implanting that humility into a model can help limit overconfidence, a common flaw that experts describe as AI immaturity. Philosophical training can also affect a model's outlook in more specific ways.

Feed an AI legal assistant the writings of John Locke, according to a professor of technology at the University of Delaware, and it will favour robust property rights as an underpinning of political liberty. And if you don't like those principles, the model makers have others. The Granite series of models from IBM comes with dials that let business customers better align outputs with their own corporate philosophies, according to the Economist report.