Centre Tightens Noose on Rice Millers: FIRs, Double Recovery and Two-Year Debarment Over Stock Shortages

The Union Ministry of Food and Public Distribution has directed states to register criminal cases, recover double the acquisition cost of shortages and debar rice millers from government milling for two years if shortages are detected during the physical verification of unmilled paddy stocks.

The directions are part of a revised Standard Operating Procedure (SOP) for physical verification (PV) of unmilled paddy, issued by the ministry on September 23. The revised SOP supersedes earlier instructions issued in July and October 2025 and has come into effect immediately.

According to the communication sent to the food departments of 23 states and Union Territories, the Food Corporation of India (FCI) and state agencies have been directed to conduct physical verification jointly. Shortages recorded during Joint Physical Verification (JPV) can attract recovery from the defaulting miller at twice the acquisition cost of Custom Milled Rice (CMR), along with 12% annual interest.

The framework also provides for registration of an FIR against the defaulting miller and debarment from government milling for two years. The ministry has asked states to incorporate provisions relating to action on shortages in their agreements with rice millers.

The move comes just days before the start of the new paddy procurement season in Punjab, where procurement is scheduled to begin on October 1. Rice millers have raised concerns that technical variations in milling recovery and prolonged storage could be mistaken for actual physical shortages.

The timing of the revised SOP is particularly significant in Punjab because rice mills are entering the new procurement season with substantial quantities of old stocks still to be cleared.

Old Stocks Pose Challenge In Punjab

Punjab is currently facing a severe storage crunch, compounded by delays in clearing stocks from the previous procurement cycle. The Centre has also extended the deadline for delivery of CMR from the 2025-26 crop to November 30, 2026, leaving some mills carrying stocks into the new procurement season.

During Kharif Marketing Season (KMS) 2025-26, around 15.61 million tonnes of paddy procured in Punjab was stored at rice mills. At the prescribed 67% out-turn ratio, this was expected to yield around 10.56 million tonnes of rice. However, as of September 1, 2026, government agencies had received only 9.12 million tonnes of rice, leaving around 1.45 million tonnes yet to be delivered.

By mid-September, paddy and rice from the previous season were still lying at a large number of rice mills across Punjab. In view of the situation, the Punjab Cabinet relaxed the state's Custom Milling Policy for 2026-27 amid the storage crisis, allowing mills that had delivered at least 90% of the rice due against their previous-season paddy allocation to receive fresh paddy.

Millers' Concerns

The Punjab Rice Millers Association has demanded that the Centre prescribe clear, scientific and uniform standards for determining stock shortages and shortfalls in milling yield before procurement begins.

According to the rice millers, a distinction needs to be made between an actual physical shortage and variations arising from the characteristics of the paddy and the milling process. They have specifically cited hybrid paddy, differences between varieties, moisture variation, drying losses, broken rice and milling recovery as factors that can affect the final quantity of rice obtained from a given quantity of paddy.

The millers have also demanded that broken rice, rejected rice and other by-products generated during milling and lying on mill premises be taken into account while assessing the overall stock.