'Russia and Nepal have Broad Prospects for Expanding Bilateral Trade and Investment'

From Soviet-era development assistance that helped build some of Nepal’s foundational infrastructure to today’s engagement in trade, tourism, technology, and multilateral cooperation, Nepal–Russia relations are entering a phase of renewed strategic relevance. In this interview with New Business Age, Andrei Kiselenko, Chargé d’affaires a.i. of the Russian Federation in Nepal, offers a detailed assessment of the current state and future direction of bilateral economic cooperation. He reflects on legacy contributions in areas such as hydropower, highways, and manufacturing, while identifying new opportunities across agriculture, energy, information technology, pharmaceuticals, transport infrastructure, and tourism. Kiselenko also discusses trade complementarities, the role of exhibitions and business platforms, and the need to restore direct air connectivity and reliable payment mechanisms to unlock the partnership’s untapped potential.

How would you describe the current state of economic cooperation between Nepal and Russia?

I would describe it as a decades-long relationship of trusted cooperation, marked by substantial untapped potential and growing mutual interest. The Soviet Union laid a strong foundation for this partnership through development assistance that included the Panauti Hydropower Station, the sugar mill and agricultural tools factory in Birgunj, a 110-kilometer section of the East–West Highway, the Janakpur Cigarette Factory, and many other facilities. Today, we see even broader prospects for expanding bilateral trade and investment. While certain challenges remain, these can be overcome with proactive engagement from both sides.

The Embassy is keen to serve as a bridge between the economic institutions and business communities of Russia and Nepal. We work closely with Nepali authorities and entrepreneurs, as well as with our counterparts in Moscow and across Russian regions, to identify the most promising areas for cooperation, facilitate connections among stakeholders, and coordinate their engagement.

I would like to take this opportunity to encourage Nepali businesses to approach the Embassy with concrete proposals and take advantage of joint initiatives with Russian companies.

Trade is one of the main pillars of economic cooperation. Which goods have the potential to drive growth in bilateral commodity exchange?

On the export side from Russia, products critical to Nepal’s food security hold significant potential—fertilizers, agricultural machinery, wheat, vegetable oils, and sugar. Russian aircraft, which are already in operation with the Nepali Army and Shree Airlines, are also highly cost-efficient and well suited to Nepal’s terrain. In addition, a range of industrial goods—such as polymers and chemical products—could support Nepal’s manufacturing sector, while earthquake-resilient technologies would be particularly relevant for the construction industry.

Nepal’s exports should not be overlooked. The Russian market offers strong opportunities for Nepali tea, coffee, lentils, vegetables and fruits, spices, medicinal and aromatic herbs, essential oils, readymade garments, cardamom, ginger, pashmina, and carpets—covering nearly half of the products listed in the Nepal Trade Integrated Strategy 2023. In this context, participation in sector-specific trade fairs in Russia, such as ProdExpo and World Food Expo, could play a valuable role in promoting Nepali brands and expanding market access.

What other areas hold promise for expanding bilateral economic cooperation?

There are significant opportunities to expand Russian investment in Nepal across several priority sectors. From my perspective, the most promising areas for foreign direct investment (FDI) include hydropower, pharmaceuticals and biotechnology, and the agro-industrial complex—particularly the establishment of fertilizer and agricultural equipment plants, as well as modern warehousing and logistics systems. Transport infrastructure, especially railways, along with timber industry and information technology, also offer strong potential. In this context, it is encouraging to see a Russian IT company, Yandex, entering the Nepali market through its international brand Yango. Several other major Russian businesses are actively exploring similar opportunities.

What makes these sectors particularly attractive is their capacity not only to draw capital, but also to create employment for Nepali people while introducing new technologies, skills, and management practices. This combination of investment and knowledge transfer can deliver lasting developmental benefits to the local economy.

Tourism represents another highly promising avenue for cooperation. This year has already seen a record number of Russian visitors to Nepal, with more than 14,300 arrivals in the first eleven months alone. Given that Russian tourists tend to spend relatively generously, their contribution to overall tourism receipts is substantial. In this regard, the proactive engagement of the Nepal Tourism Board (NTB) in major promotional events in Russia—including MITT-2025 and the Global MICE Congress—has been particularly effective.

Beyond leisure travel, Russia also offers opportunities for Nepalis in medical tourism, as treatment costs in Russia are often significantly lower than in many other destinations. The launch of the VTB Med platform, in coordination with the Ministry of Health and Population, is a timely initiative to facilitate access to these services. The Embassy is always ready to assist interested hospitals in Nepal.

To fully realize these opportunities, restoring direct air connectivity and establishing reliable payment mechanisms will be essential—both of which will require close coordination and proactive engagement from Nepali authorities.

Cooperation within regional organizations such as SAARC and BIMSTEC is an important topic in Kathmandu. Has there been any progress in economic integration between Russia and its neighboring countries?

Several successful integration frameworks are already in place, ranging from the Commonwealth of Independent States to the Union State of Russia and Belarus. I would like to focus more on the Eurasian Economic Union (EAEU).

The EAEU, which comprises Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan, is built around an ambitious vision of deep economic integration. It has established a customs union, ensured the free movement of goods, services, and labor, and created a supranational governing body, the Eurasian Economic Commission, to oversee trade policy. The EAEU has concluded free trade agreements with countries such as Vietnam, Singapore, Indonesia, and Iran, and economic partnership agreements with China and the UAE. A free trade agreement with India is currently under preparation.

All this underscores the level of integration already achieved within the EAEU. The process continues to deepen. On December 21, member states signed the Action Plan (Roadmap) for the Implementation of the Declaration on the Future Development of Economic Processes within the EAEU until 2030 and for the period up to 2045—known as The Eurasian Economic Path.

Economic indicators are encouraging. Between 2020 and 2024, the Union’s combined gross domestic product grew by 11%, with industrial output expanding by 15% and agricultural production by 10%. Unemployment declined from nearly 6% in 2020 to around 3% by 2024. This year, key indicators have continued to show positive momentum, with rising wages across all member states and persistently low unemployment.

We believe the EAEU has the potential to become one of the key pillars of economic integration across Greater Eurasia—linking with regions and organizations such as ASEAN, SAARC, BIMSTEC, and the Asia Cooperation Dialogue—where our Nepali colleagues play an active and constructive role alongside many other regional frameworks.

Russia is facing numerous sanctions and other adverse measures. How successfully is the country coping with them?

These restrictions are illegitimate from the standpoint of international law. Russia is not alone in facing such measures; they are part of a broader pattern of economic neo-colonialism that many countries of the Global South continue to experience. Unable to compete on fair terms, some former colonial powers seek to contain emerging economies through unilateral sanctions.

This was precisely the intent behind the sanctions imposed on Russian agricultural products, fertilizers, oil, gas, and other key commodities. In pursuing their own narrow interests, the authors of these measures disregarded the needs of the global majority. Beyond violating the principles of fair competition, sanctions against Russia have disrupted global production and supply chains, distorted investment and trade flows, worsened debt pressures, and reduced access to goods, finance, and technology for many countries.

Restrictions on Russian energy exports and their transportation created artificial shortages in global energy markets. Efforts by parts of Europe to replace Russian supplies through purchases from developing-country markets only pushed prices higher. Similarly, sanctions on Russian agricultural products and fertilizers contributed to spikes in global food prices, with particularly severe consequences in Asia and Africa.

Importantly, the negative effects of these policies are increasingly being felt by those who employ them for geopolitical purposes. According to the International Monetary Fund, economic growth in advanced economies did not exceed 1.8% in 2024 and is projected at 1.6% in 2025. In several European countries, the phase-out of Russian energy has put heavy pressure on industry, especially energy-intensive sectors, while electricity prices for households have risen by 50 to 100%.

Equally damaging are attempts to manipulate and appropriate Russia’s gold and foreign-exchange reserves—described by President Vladimir Putin as de facto robbery. Such actions violate the principles of sovereign equality and state immunity enshrined in the UN Charter and international law. They also undermine trust in Western jurisdictions. Countries of the Global Majority, as well as international investors, are taking note of the risks involved in holding assets there.

These practices are already reshaping global financial relations. Any state pursuing an independent policy now faces the prospect of losing assets held abroad. Large portions of Global South reserves are therefore at risk, and their potential confiscation could destabilize global finance, worsen debt and budget deficits, and ultimately trigger capital flight harmful to the very economies imposing these measures. As the Central Bank of Russia stated on December 3, any attempt by the European Commission to seize Russian reserves will be legally challenged in national and international courts.

As for Russia’s ability to cope, the figures speak for themselves. Over the past three years, Russia’s GDP has grown by 9.7%, compared with 3.1% in the Eurozone. Inflation is declining and is expected to fall to around 5.7–5.8% by the end of 2025, while unemployment has dropped to a historic low of 2.2%.

To what extent have sanctions cut Russia off from the global economy?

In reality, they have not. On the contrary, the current circumstances have prompted Russia to significantly strengthen its trade, economic, and financial ties with constructive partners across the Global South. This cooperation will continue to expand in line with the core interests of the Russian Federation and its economic actors. A major shift is already underway toward mutual settlements in national currencies, with the ruble and the currencies of friendly countries now accounting for around 85% of Russia’s foreign trade transactions across all goods.

At the same time, Russia has deepened cooperation within BRICS across key areas including politics, security, the economy, finance, and cultural and humanitarian exchanges. In 2025, intra-BRICS trade reached approximately $1 trillion. The grouping has expanded significantly and now brings together leading economies from Eurasia, Africa, the Middle East, and Latin America. BRICS currently comprises 10 full members with voting rights: Brazil, China, Egypt, Ethiopia, India, Indonesia, Iran, Russia, South Africa, and the United Arab Emirates. Partner countries include Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Nigeria, Thailand, Uganda, Uzbekistan, and Vietnam. In addition, several countries—including Algeria, Bangladesh, Colombia, and Uruguay—are shareholders of the New Development Bank without yet being full BRICS members. Of particular importance is the development of decentralized payment systems within BRICS which is aimed at enabling seamless cross-border transactions independent of Western financial infrastructure.

Economic and technological cooperation within the Shanghai Cooperation Organization has also gained momentum in recent years. In the Tianjin Declaration adopted by SCO heads of state on September 1, 2025, members reaffirmed their commitment to reforming global economic governance and strengthening the multilateral trading system. They opposed unilateral coercive measures and highlighted initiatives on trade facilitation, regional cooperation, e-commerce, and digital trade infrastructure, with particular emphasis on bridging the digital divide between developed and developing economies. I am confident that deeper engagement with BRICS and the SCO can deliver tangible economic benefits for Nepal and its people as well.

Is Russia taking concrete steps to mitigate climate change?

As the world’s largest country by territory, Russia cannot afford to overlook climate-related challenges. We recognize and welcome the growing shift toward more pragmatic approaches to the global energy transition. These approaches take into account the full range of national circumstances. This process should not discriminate against any particular energy sources or technologies in ways that undermine socioeconomic development.

In line with Russia’s national greenhouse gas emissions reduction target approved by President Vladimir Putin in 2020, the country is implementing a range of measures to curb emissions. These include programs to reduce greenhouse gases, deploy innovative technologies, improve energy efficiency, and promote energy conservation. Russia’s Climate Doctrine has set out a long-term vision of achieving carbon neutrality by 2060.

We also share the view of our Nepali colleagues that scaling up efforts to mobilize climate finance and facilitate technology transfer to developing countries is essential. Strengthening support in these areas will be critical to enabling developing economies to play a more effective role in global emissions reduction and climate action.

Will the Russian economy remain competitive over the next two or three decades?

Without a doubt. Russia places strong emphasis on innovation and technological advancement. We are global leaders—or among the leaders—in a wide range of fields, including information technologies such as artificial intelligence and digital platforms, civil nuclear energy and hydropower, transport infrastructure, space exploration, financial digitalization, e-governance, pharmaceuticals, biotechnology, and several other advanced sectors. In this sense, the Russian economy is among the most progressive globally.

The growing participation of foreign economic stakeholders at major events in Russia clearly demonstrates that this progress is visible and recognized internationally. Two flagship events organized this year—the St Petersburg International Economic Forum and the Eastern Economic Forum—were attended by Sushil Gyawali, CEO of the Office of the Investment Board Nepal, who led the Nepali delegation, as well as by renowned industrialist Binod Chaudhary. Their presence reflects the growing interest of Nepali policymakers and business leaders in engaging more deeply with Russia’s economic landscape.

I would like to extend an open invitation to all to visit Russia.  We look forward to hosting high-level official and business delegations from Nepal in the coming year at a wide range of forums that offer excellent opportunities to explore cooperation.

In addition to the St Petersburg International Economic Forum, the Eastern Economic Forum, and MITT, these include Russian Energy Week, the International Transport and Logistics Forum, the Caucasus Investment Forum, and numerous sector-specific platforms designed to foster dialogue, partnerships, and long-term economic collaboration.