5 min readBhopalJul 11, 2026 07:12 AM IST
First published on: Jul 10, 2026 at 02:36 PM IST
Police in Madhya Pradesh are investigating the alleged diversion of government rice meant for an ethanol plant before it reached its destination.
To boost ethanol blending and reduce dependence on imported fossil fuels, the Union government has permitted surplus foodgrain, including rice held by the Food Corporation of India (FCI), to be supplied to ethanol manufacturers.
The probe in Madhya Pradesh centres on a consignment of the government’s custom-milled rice (CMR), which investigators say never reached its destined ethanol plant in Chhindwara. Instead, officials found it parked inside a private rice mill in Waraseoni, where the accused “intended to recycle rice under the 2025-26 Custom Milling Programme and re-deposit it under the same scheme”.
Police have alleged that Rahul Pratap, an authorised representative of AVJ Agrico Pvt Ltd, “intended to divert the rice received from the FCI to a local rice mill and purchase cheaper rice for use in ethanol production at the Chhindwara ethanol plant, thereby causing direct financial loss to the Government”.
Apart from Pratap, police have booked a truck driver, Durgesh Shendre, and Sancheti Rice Mill proprietor Saurabh Sancheti. Agrico Pvt Ltd and Sancheti Rice Mill did not respond to calls and messages seeking a comment.
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“The truck carrying government rice appears to have been brought into the mill premises for the purpose of recycling it into custom milling and depositing it again under the CMR programme,” the FIR filed last month alleges.
What investigators suspect
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, below the government’s estimated economic cost of procuring, milling, transporting and storing rice, which is around Rs 4,100 per quintal.
Investigators are examining whether some ethanol operators, instead of processing the subsidised government rice into ethanol, allegedly sold it to rice millers at higher rates. At the same time, they are examining whether cheaper broken rice, commonly used for ethanol production and available in the open market for roughly Rs 2,100 per quintal, was procured instead.
“We have formed an SIT to probe the case. The allegations are being investigated,” a senior police officer from Balaghat said. According to the investigation, records relating to paddy supplied for milling, stock verification, electricity consumption at rice mills, labour deployment and other operational indicators are being examined.
Investigators suspect that rice millers purchasing the government rice allegedly repacked it in fresh gunny bags and deposited it back into government warehouses as freshly produced Custom Milled Rice (CMR) under their milling contracts.
According to the police, the inquiry began after officials received information that “government rice meant for an ethanol plant had allegedly been diverted”. Acting on the complaint, the Tahsildar, Naib Tehsildar and the Junior Supply Officer conducted a surprise inspection at Sancheti Rice Mill in Waraseoni.
Inside the mill premises, officials found a truck loaded with 490 bags containing 242.55 quintals of government rice. Investigators recorded that the vehicle was parked deep inside the premises, despite there being sufficient open space and covered sheds near the front of the mill. This led to suspicion about the consignment’s movement.
During the inspection, the truck driver told officials that the rice had been loaded from the FCI depot at Navegaon in Balaghat and was meant for an ethanol plant in Chhindwara’s Borgaon. According to his statement, he had not been given any documents relating to either the vehicle or the rice consignment when he left the depot. Since his residence was nearby, he told investigators that he had decided to halt for the night and continue the journey the following morning.
The proprietor of the rice mill, however, stated that the truck owner knew him and had parked the vehicle inside the mill because it was raining and the truck could be kept under the tin shed.
“The statements of the driver and the rice mill proprietor are inconsistent. The driver stated he had gone home, whereas the proprietor stated the truck had been parked because of rain,” the FIR stated. It also notes that the truck had already been covered with a tarpaulin and that it was one of three consignments dispatched together for the same ethanol plant.
Officials subsequently seized both the truck and its cargo and handed them over to Waraseoni police.
The inquiry also drew on the statement of the FCI depot manager at Navegaon. According to investigators, the depot manager stated that the rice had been officially released under the government’s ethanol scheme and handed over to the authorised representative of the ethanol company. “After the rice leaves the FCI depot, there is no responsibility on the FCI to ensure its transportation to the ethanol plant,” the depot manager’s statement, quoted in the FIR, said.
The current reserve price for rice supplied for ethanol production is Rs 2,320 per quintal, below the government's estimated economic cost of procuring, milling, transporting and storing rice, which is around Rs 4,100 per quintal. (Source: Express Archives/ Representational) 
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