The Food Corporation of India (FCI) on Monday said its probe into the alleged diversion of subsidised rice meant for ethanol production in Madhya Pradesh was limited to 242.50 quintals, valued at around ₹5.63 lakh.
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The Central government agency rejected reports claiming that 5 lakh tonnes of rice worth ₹1,160 crore were illegally diverted in the state, calling them “not only factually incorrect but also completely baseless”, PTI news agency reported.
The corporation said the ₹1,160 crore figure referred to the total value of rice legally supplied to distilleries under the ethanol blending programme and cannot be treated as the value of the alleged diversion.
Rice supply under ethanol programme
FCI supplied 2.98 lakh tonnes of rice to Madhya Pradesh distilleries during the 2024-25 Ethanol Supply Year at ₹22.50 per kg.
During the 2025-26 supply year, up to June 30, 2026, FCI issued another 2.41 lakh tonnes at ₹23.20 per kg, taking the total supply to around 5.39 lakh tonnes, according to PTI.
FCI said government monitoring systems detected irregularities in rice movement in the first week of June 2026. The MP Food Department registered an FIR on June 5, and a joint FCI-Department of Food and Public Distribution team inspected the site on June 11.
The corporation has withheld the security deposit of the concerned distillery and stopped further rice allocation. The MP government has formed an SIT, while the state civil supplies corporation has blacklisted the rice mill and imposed a ₹44.12 lakh penalty.
MP probe expands
What started as a check on one suspicious truck has exploded into a massive investigation. Authorities are now tracking 17 seized trucks, 56 rice mills, 22 ethanol plants, and testimonies from over 50 witnesses, according to NDTV.
The probe took off after police caught a truck carrying government rice to an ethanol plant parked inside a private mill instead. Now, investigators want to know if plants actually turned this subsidized rice into fuel, or if they secretly funneled it through private mills to sneak it back into government warehouses.
The report said that police are uncovering a “circular trade” loop. In this scheme, ethanol plants allegedly sold their cheap government rice to private millers for a quick profit. The millers then repacked the grain and delivered it back to the government as “newly processed” rice.
To crack the case, police have questioned the owners of 56 rice mills, gathered their business records, and seized 17 suspect trucks.
Investigators are now matching government dispatch logs, warehouse receipts, and transport records with actual ethanol production numbers. They are checking electricity bills, machinery run-times, and labour logs at both the distilleries and the mills to see if their actual output matches the mountain of rice they claimed to process.
