The study contends that the traditional rice milling industry has less operational efficiency due to the adoption of traditional milling methods compared to modern mills. The results showed that the capacity utilization of traditional unit was around 25 per cent only as compared to 75 per cent capacity utilization in modern units. With a marginal increase in the number of working days and duration of each shift, the quantity processed per day and annual quantity processed was around 23 times higher in the modern units as compared to the traditional units. Procurement costs were lower when paddy was purchased directly from farmers instead of purchasing from commission agents. Thus, mills would benefit from strong contractual arrangements with paddy growers. The total processing cost per quintal of paddy amounted to 27 per quintal for traditional and 296 for modern unit to process rice from paddy and 35.30 for traditional and 41 for modern unit to process paddy into poha. Sales tax formed the major proportion in the total marketing cost. It was 35 per quintal of rice sold by traditional units and 70 per quintal in modern units. Invariably all the rice mill owners opined that the existing tax rates are very high both while buying paddy and selling rice. High taxes generally get resisted in high prices. Since rice is an important staple food of the state, it would be advisable to the government to lower the tax rates and help to reduce the prices, which would help consumers especially in the present days of rising food prices.