The Food Corporation of India has rejected reports of a ₹1,160 crore rice diversion for ethanol, clarifying that the active investigation involves only 242.5 quintals worth approximately ₹5.63 lakh. The government has already blacklisted the involved mill and initiated a probe into the specific irregularities.
The Food Corporation of India (FCI) has issued a formal statement addressing reports regarding the alleged misappropriation of rice intended for ethanol production in Madhya Pradesh. The state-run agency clarified that claims of a ₹1,160 crore diversion are factually incorrect and misrepresent the nature of the government’s ethanol blending programme.
Clarification on Financial Scope
The figure of ₹1,160 crore, which appeared in recent media reports, actually refers to the total value of rice supplied to distilleries in Madhya Pradesh under the Ethanol Blending Programme (EBP) across the 2024-25 and 2025-26 supply years. According to official data, the FCI issued 2.98 lakh tonnes of rice at ₹22.50 per kg during the 2024-25 cycle and an additional 2.41 lakh tonnes at ₹23.20 per kg up to June 30, 2026. The agency stated that this represents legitimate supply and should not be confused with the scope of the current investigation.
The probe, which is being handled by state and central authorities, is focused on a specific incident involving 242.5 quintals of rice, valued at approximately ₹5.63 lakh. FCI confirmed that irregularities were identified internally in early June 2026, leading to immediate administrative action before the issue gained public attention.
Enforcement Actions and Oversight
The government has moved to secure its interests while the investigation continues. The Madhya Pradesh state government has formed a Special Investigation Team (SIT) to examine the case. Additionally, the State Civil Supplies Corporation has imposed a penalty of ₹44.12 lakh on the involved rice mill and subsequently blacklisted it.
At the central level, the FCI has withheld the security deposit of the distillery in question and suspended all further allocations of rice to the firm. Furthermore, the Department of Food & Public Distribution (DFPD) has instructed NABARD to withhold interest subvention for the unit. These steps serve to protect public funds while the legal and administrative inquiries proceed.
Investors and stakeholders tracking this situation may monitor the findings of the SIT to understand whether there are broader systemic gaps in the distribution of subsidized grains for industrial use. The primary monitorable remains the conclusion of the formal investigation and the potential for any further recovery of funds or additional regulatory penalties against the entities involved.