FCI calls media reports of Rs 1,160 crore ethanol rice diversion 'factually incorrect'

The Food Corporation of India (FCI) on Monday rejected media reports alleging diversion of FCI rice worth Rs 1,160 crore for ethanol production in Madhya Pradesh, calling them "factually incorrect" and "completely baseless."

In a clarification, FCI said the investigation pertains to the alleged diversion of 490 bags of rice (242.5 quintals) supplied under the Ethanol Blending Programme, with an estimated value of about Rs 5.63 lakh, and not the entire quantity of rice supplied to distilleries.

The corporation said that during the 2024-25 ethanol supply year, it had issued 5.39 lakh metric tonnes (LMT) of rice to distilleries in Madhya Pradesh.


It said the Rs 1,160 crore figure cited in media reports represented the legitimate value paid by distilleries for around 5 LMT of rice supplied by FCI and could not be construed as the value of the alleged diversion.

FCI said the irregularities were detected by government agencies during the first week of June and action was initiated before the media reports surfaced. It registered an FIR on June 5, while the Department of Food and Public Distribution conducted a joint inspection that established a prima facie link between recovered rice bags and consignments issued under the Ethanol Blending Programme.

Pending completion of the investigation, FCI said it has withheld the security deposit of the concerned distillery and stopped further allocation of rice to the firm. It added that the Department of Food and Public Distribution has directed NABARD to withhold release of the interest subvention.

The Madhya Pradesh government has also constituted a Special Investigation Team (SIT), while the state's Civil Supplies Corporation has imposed a penalty of Rs 44.12 lakh and blacklisted the concerned rice mill.

FCI said it remains committed to transparency and accurate dissemination of information, adding that appropriate legal action will be taken against those found responsible in accordance with the law.