The Food Corporation of India (FCI) on Monday rejected reports claiming that rice worth around ₹1,160 crore had been diverted under the ethanol blending programme (EBP) in Madhya Pradesh, calling such reports “factually incorrect” and “misleading.”
In a statement, FCI clarified that the investigation pertains only to the alleged diversion of 490 bags (242.50 quintals) of rice supplied for ethanol production during 2024-25, with an estimated value of ₹5.63 lakh.
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“The investigation presently underway is not related to the entire quantity of rice supplied under the ethanol blending programme. It pertains to an alleged diversion of 490 bags (242.50 quintals) of rice involving an estimated value of about ₹5.63 lakh,” FCI said.
Why did the ₹1,160 crore figure surface?
According to FCI, the figure of ₹1,160 crore that has been reported in media sources is not the value of the diverted rice but the value of the legally provided rice to distilleries in Madhya Pradesh following payment of money.
As per FCI’s report, during the 2024-25 Ethanol Supply Year (ESY), approximately 2.98 lakh tonnes of rice were issued to distilleries at ₹22.50 per kg. In addition, between November 2025 and June 30, 2026, an additional 2.41 lakh tonnes were issued at ₹23.20 per kg making the total issue quantity close to 5.39 lakh tonnes.
FCI has stated that the mentioned figure of ₹1,160 crore has been computed assuming diversion of five lakh tonnes of rice based on the issue price.
What action has been taken?
FCI said the alleged irregularity was detected through the government’s monitoring mechanism in the first week of June.
According to the corporation, notices were issued to the concerned distillery, while the Madhya Pradesh Food Department registered an FIR on June 5. A joint inspection by officials of the Department of Food and Public Distribution (DFPD) and FCI on June 11 reportedly established a prima facie link between recovered rice bags and consignments supplied under the ethanol blending programme.
Official Clarification
— Food Corporation of India (@FCI_India) July 13, 2026
Reports alleging diversion of FCI rice worth ₹1,160 crore are based on an incorrect interpretation of facts. The investigation pertains to an alleged diversion of 490 bags (242.50 quintals) valued at approximately ₹5.63 lakh. Appropriate legal and… pic.twitter.com/QAHHCsAO6V
Pending completion of the investigation, FCI has withheld the distillery’s security deposit and suspended further rice allocations.
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The DFPD has also directed NABARD to withhold interest subvention to the firm.
On the other hand, the government of Madhya Pradesh has formed a Special Investigation Team (SIT) to probe into the case. Madhya Pradesh State Civil Supplies Corporation has banned the rice mill involved in this case and fined them ₹44.12 lakh.
According to FCI, action will be taken against those responsible after the completion of the investigation.
FAQ
Q1. Is the diversion of ₹1,160 crore rice under investigation?
No, as per the information provided by FCI, the investigation is regarding the diversion of 242.50 quintals of rice worth approximately ₹5.63 lakh, not rice worth ₹1,160 crore.
Q2. Why did the figure of ₹1,160 crore come into picture?
As per FCI, it is the total value of the rice supplied to distilleries for the ethanol blending program and not the value of the diversion of the rice.
