China buys first Indian rice in decades amid scarce supply

China has begun importing Indian rice for the first time in at least three decades due to tightening supplies from Thailand, Myanmar and Vietnam and an offer of sharply discounted prices, Indian industry officials said.

India is the world's biggest rice exporter and China the biggest importer. Beijing buys in around 4 million tonnes a year but has avoided purchases from India, citing quality issues.

The rice imports come despite political tensions over a border dispute in the Himalayas which erupted into a clash in June in which 20 Indian soldiers were killed.

India has since tightened rules for investments from China and banned dozens of Chinese mobile apps, including from tech giants Tencent, Alibaba and ByteDance.

Although the public mood in India has been anti-China, the country has remained engaged with Indian businesses.

"For the first time China has made rice purchases. They may increase buying next year after seeing the quality of Indian crop," B.V. Krishna Rao, president of the Rice Exporters Association, told Reuters on Wednesday.

Indian traders have contracted to export 100,000 tonnes of broken rice for Dec-February shipments at around $300 per tonne on a free-on-board (FOB) basis, industry officials said.

China's traditional suppliers, such as Thailand, Vietnam, Myanmar and Pakistan, have limited surplus supplies for export and were quoting at least $30 per tonne more compared with Indian prices, according to Indian rice trade officials.

Thailand, the world's second-largest rice exporter and key supplier to China, suffered a drought this year that has affected the rice crop. Its shipments in 2020 could fall to 6.5 million tonnes, the lowest in 20 years.

"Thailand, Myanmar and Vietnam are struggling due to limited supplies. China eventually was left with no option but to buy from India," said Himanshu Agarwal, executive director at Satyam Balajee, India's biggest rice exporter.

"I don't know how long it will last. At least, movement has started."

China's General Administration of Customs did not immediately respond to a fax seeking comment on rice imports.

"China buying rice from India, or U.S. or any country, is just adding some flavor to the domestic market. The trade has very limited impact on the China market," said Yin Xiuying, analyst with trade website www.ChinaGrain.CN, based in Harbin, capital of China's northeastern province of Heilongjiang.

"I don't think China will increase rice imports or continue to buy more from India," Yin said.