India Slashes Broken Grain Limit in PDS Rice Under New Milling Scheme

The Cabinet Committee on Economic Affairs last week gave its nod to the Rice Milling Transformation (RMT) scheme, setting tighter quality standards for rice milled from Food Corporation of India stocks and supplied through the public distribution system. Under the new norms, the broken-grain ceiling for raw (white) rice has been brought down from 25% to 10%, while parboiled rice must now meet a stricter 5% threshold, down from the earlier 16%.

The scheme is a direct policy response to the strain on India's central grain storage infrastructure. As of June 1, the Central Pool held a record 122.64 million tonnes of foodgrain, comprising 68.34 mt of rice (including 42.84 mt of paddy), 53.41 mt of wheat, and 0.9 mt of coarse grains. The Hindu BusinessLine reported that some of this grain is lying in the open, necessitating urgent evacuation.

A central rationale for the RMT scheme is logistical. By keeping broken rice — typically around 15% of processed output — at the miller's premises rather than transporting it back to FCI godowns, the government estimates it can effectively free up storage space for approximately 4 million tonnes of grain.

Under the revised arrangement, millers processing 100 kg of paddy will deliver 57 kg of rice (containing roughly 7 kg of broken grain at 10%) directly to FCI, retaining the remaining 10 kg of broken grain on-site. FCI will subsequently auction this retained stock. Previously, 67 kg of rice — containing as much as 16.75 kg of broken grain — was handed over per 100 kg of paddy processed. Selling broken rice from miller premises also spares the government significant outward freight costs, according to The Hindu BusinessLine.

The RMT scheme is not without precedent. Andhra Pradesh ran an earlier pilot under which broken rice was left with millers, who were compensated with an incentive of ₹110 per quintal. The condition was that millers still deposited the same standard yield — 67 kg of rice at 10% broken grain — per 100 kg of paddy processed, consistent with prescribed norms.

The success of this pilot appears to have informed the national rollout. The new scheme's Phase I allocates 50 lakh tonnes of rice for processing across several states: 37.5 lt of raw rice and 12.5 lt of parboiled rice. Punjab leads state-wise allocations with 14 lt of raw rice, followed by Andhra Pradesh at 10.5 lt of raw rice and 2 lt of parboiled. Haryana receives 8 lt, Chhattisgarh 3 lt, and Madhya Pradesh 1 lt of raw rice. Odisha is allotted 1 lt of raw rice and 7 lt of parboiled, while Telangana receives 3.5 lt of parboiled rice.

Beyond storage relief, the RMT scheme opens a commercial window for ethanol producers. The government has announced that the broken rice retained at miller premises will be auctioned under the Open Market Sale Scheme (OMSS) at a base price of ₹20 per kg — notably lower than the ₹23.20/kg currently available to ethanol distilleries through the government's dedicated rice-for-ethanol programme.

If distilleries — directly or through agents — can secure broken rice from nearby mills at ₹20–21/kg, their feedstock costs fall, potentially improving margins on ethanol sold to oil marketing companies. The Hindu BusinessLine noted that OMCs pay a higher rate for ethanol produced from rice procured on the open market compared with that made from government-supplied rice under the ethanol programme, giving distilleries an added incentive to participate in these auctions.