The Food Corporation of India (FCI) has dismissed reports alleging the diversion of ₹1,160 crore worth of FCI rice for ethanol production in Madhya Pradesh, describing the claims as “factually incorrect” and “completely baseless.”
In an official clarification issued on Monday, the state-run grain procurement agency said the investigation relates to the alleged diversion of 490 bags of rice, equivalent to 242.5 quintals, with an estimated value of ₹5.63 lakh, and not the entire quantity of rice supplied to distilleries under the government’s Ethanol Blending Programme (EBP).
According to FCI, it supplied 5.39 lakh metric tonnes (LMT) of rice to distilleries in Madhya Pradesh during the 2024-25 ethanol supply year. The corporation said the ₹1,160-crore figure cited in media reports represents the legitimate value paid by distilleries for nearly 5 lakh metric tonnes of rice procured from FCI and should not be interpreted as the value of any alleged diversion.
The agency said the suspected irregularities were detected by government authorities in the first week of June, well before the media reports emerged. An FIR was registered on June 5, following which the Department of Food and Public Distribution conducted a joint inspection that established a prima facie link between recovered rice bags and consignments supplied under the Ethanol Blending Programme.
As a precautionary measure, FCI has withheld the security deposit of the distillery under investigation and suspended further rice allocations to the company. The Department of Food and Public Distribution has also directed NABARD to withhold the release of interest subvention linked to the unit.
Meanwhile, the Madhya Pradesh government has constituted a Special Investigation Team (SIT) to probe the matter. The state’s Civil Supplies Corporation has imposed a penalty of ₹44.12 lakh on the concerned rice mill and has blacklisted it.
FCI reiterated its commitment to transparency and said the investigation is continuing. The corporation added that appropriate legal action will be taken against any individuals or entities found responsible once the inquiry is completed.