Subsidised rice meant for ethanol plant allegedly diverted in Madhya Pradesh, probe on

Police in Madhya Pradesh are investigating the alleged diversion of government rice meant for an ethanol plant before it reached its destination. The probe centres on a consignment of custom-milled rice (CMR) from the Food Corporation of India (FCI) that investigators say never arrived at its intended ethanol facility in Chhindwara.

According to the First Information Report (FIR) filed last month, the rice was found parked inside a private rice mill in Waraseoni, Balaghat district. The police have booked three individuals: Rahul Pratap, an authorised representative of AVJ Agrico Pvt Ltd; truck driver Durgesh Shendre; and Saurabh Sancheti, proprietor of Sancheti Rice Mill. The FIR alleges that the accused intended to recycle the government rice under the 2025-26 Custom Milling Programme and deposit it again under the same scheme, causing financial loss to the government.

The Union government permits surplus foodgrain from the FCI to be supplied to ethanol manufacturers to boost ethanol blending and reduce dependence on imported fossil fuels. Under the Open Market Sale Scheme (OMSS), only ethanol distilleries registered with oil marketing companies and holding ethanol supply contracts are eligible to purchase FCI rice. The current reserve price for rice supplied for ethanol production is Rs 2,320 per quintal, significantly below the government's estimated economic cost of around Rs 4,100 per quintal.

Investigators suspect that some ethanol operators may have sold the subsidised government rice to rice millers at higher rates instead of processing it into ethanol. They are also examining whether cheaper broken rice, available in the open market for roughly Rs 2,100 per quintal, was procured and used for ethanol production in place of the diverted rice.

A senior police officer from Balaghat confirmed that a Special Investigation Team (SIT) has been formed to probe the case. The investigation includes scrutiny of records related to paddy supplied for milling, stock verification, electricity consumption at rice mills, labour deployment, and other operational indicators.

The police inquiry began after officials received a tip-off about the alleged diversion. During a surprise inspection at Sancheti Rice Mill, officials found a truck loaded with 490 bags containing 242.55 quintals of government rice parked deep inside the premises. The truck driver told officials that the rice had been loaded from the FCI depot at Navegaon in Balaghat and was meant for the ethanol plant in Chhindwara's Borgaon. He stated that he had not been given any documents relating to the vehicle or the rice consignment at the time of departure.

AVJ Agrico Pvt Ltd and Sancheti Rice Mill did not respond to calls and messages seeking comment. The investigation is ongoing.