Telangana CID arrests 14 rice millers in ₹242 crore FCI supply fraud
Synopsis
Telangana's CID has arrested 14 rice millers who allegedly pocketed the premium on fine variety paddy by diverting it to open markets and substituting cheaper coarse rice — including rice sourced from outside the state — in government FCI deliveries. With potential losses pegged at ₹242 crore, authorities say only swift Civil Supplies intervention prevented the damage from growing further.
Key Takeaways
Telangana CID arrested 14 rice millers on 25 October 2025 for alleged irregularities in FCI rice supply during Kharif 2025–26 .
Millers allegedly diverted 'Sanna Rakam' (fine variety) paddy to open markets and supplied cheaper 'Doddu Rakam' (coarse variety) rice instead.
In Nizamabad , Karimnagar , and Mulugu , 16 mills reportedly delivered 3,385.820 tonnes of coarse rice against fine variety allotments; estimated bonus-related loss: ₹1.69 crore .
A further 45,414.833 tonnes flagged for conversion carries a potential bonus-related financial exposure of approximately ₹242 crore .
Three criminal cases registered; charges include breach of the Custom Milled Rice (CMR) Agreement , criminal breach of trust, and conspiracy.
Investigators are examining possible official involvement and the full extent of the alleged criminal conspiracy.
The Crime Investigation Department (CID) of Telangana Police has arrested 14 rice millers for alleged irregularities in the supply of fine variety rice to the Food Corporation of India (FCI), following an investigation triggered by a formal complaint on 24 October 2025. The case involves the alleged diversion of premium paddy meant for government procurement during Kharif 2025–26, with potential financial exposure estimated at approximately ₹242 crore.
How the Fraud Allegedly Unfolded
The Government of Telangana procured 71.86 lakh tonnes of paddy during Kharif 2025–26, against a target of 59.60 lakh tonnes of rice for delivery to the FCI. According to the CID, certain millers allegedly diverted 'Sanna Rakam' (fine variety) paddy allotted to them into the open market — where it commands a higher price — and substituted cheaper 'Doddu Rakam' (coarse variety) rice, reportedly including rice sourced from outside Telangana, in its place.
Inspections conducted by Enforcement and Task Force (ETF) teams, followed by laboratory analysis, reportedly revealed that rice samples supplied in the examined cases did not conform to the 'Sanna Rakam' variety stipulated in their allotments. The CID stated that the alleged substitution prima facie establishes violations of the Custom Milled Rice (CMR) Agreement for Kharif Marketing Season 2025–26, criminal breach of trust, wrongful gain, and conspiracy to cause wrongful loss to the government exchequer.
Scale of Alleged Losses
In the districts of Nizamabad, Karimnagar, and Mulugu, 16 rice mills reportedly delivered 3,385.820 tonnes of coarse variety rice against fine variety allotments, resulting in an estimated bonus-related loss of approximately ₹1.69 crore. A further 45,414.833 tonnes had reportedly been allocated for conversion, with the potential bonus-related financial implication estimated at approximately ₹242 crore.
Notably, according to the CID, timely intervention by Civil Supplies authorities and the issuance of stoppage orders prevented further potential loss from materialising.
Arrests and Cases Registered
The CID registered three criminal cases and arrested 14 millers in connection with the alleged scheme. The complaint was originally lodged by the General Manager (Procurement), Civil Supplies Corporation, on 24 October, prompting the CID to take up the investigation swiftly.
What Investigators Are Probing
The investigation, which is currently in progress, aims to establish the full extent of the alleged diversion and substitution, the individual roles of the concerned millers, and how allotments and conversion requests were processed. Investigators are also examining the possible involvement of government officials and other persons, the likelihood of a wider criminal conspiracy, and the actual quantum of financial loss to the exchequer.
With procurement fraud of this scale touching both the FCI supply chain and the state's civil supplies mechanism, the case is likely to put renewed scrutiny on the oversight processes governing the CMR agreement in future Kharif seasons.
Point of View
Which raises the question of why variety-conformance checks are not conducted at intake rather than retrospectively. The alleged involvement of rice sourced from outside Telangana adds another layer: it suggests the substitution may have required supply-chain coordination beyond individual millers, making the probe into official complicity the genuinely consequential thread to watch. If that thread unravels, this case moves well beyond a procurement irregularity into a structural indictment of Kharif supply-chain oversight.
NationPress
25 Oct 2026
Frequently Asked Questions
Why were 14 rice millers arrested by the Telangana CID?
The millers were arrested for allegedly diverting fine variety 'Sanna Rakam' paddy allotted to them under the Kharif 2025–26 procurement scheme into open markets and delivering cheaper coarse variety 'Doddu Rakam' rice — reportedly including rice sourced from outside Telangana — to the Food Corporation of India instead. Three criminal cases have been registered, covering violations of the Custom Milled Rice agreement, criminal breach of trust, and conspiracy.
What is the estimated financial loss in the Telangana rice miller fraud?
Authorities estimate a bonus-related loss of approximately ₹1.69 crore from confirmed deliveries of coarse rice against fine variety allotments in Nizamabad, Karimnagar, and Mulugu. A further potential exposure of approximately ₹242 crore related to 45,414.833 tonnes allocated for conversion was reportedly averted through timely Civil Supplies intervention and stoppage orders.
What is the Custom Milled Rice (CMR) Agreement and why does it matter here?
The CMR Agreement is a contract between the state government and rice millers under which millers receive paddy of a specified variety for milling and must deliver the corresponding milled rice to the FCI. Allegedly substituting a cheaper variety for a premium one violates this agreement and deprives the government of the quality it paid for, while the miller profits from selling the premium paddy in open markets.
Which districts are under investigation in the Telangana rice fraud case?
The confirmed irregularities identified so far involve mills in Nizamabad, Karimnagar, and Mulugu districts. The CID's ongoing investigation may extend to additional areas as it maps allotments, conversion requests, and documentary evidence.
Could government officials be implicated in the Telangana rice procurement fraud?
The CID has explicitly stated that its investigation will examine the possible involvement of officials and other persons, as well as the likelihood of a broader criminal conspiracy. No officials have been named or arrested at this stage, but the probe is actively looking at how allotments and conversion requests were processed.
