‘Don’t kill the golden goose’: Annamalai urges centre to exempt small retailers from proposed UPI charges

Former Tamil Nadu BJP president K Annamalai has urged the Centre to exempt small retailers from Merchant Discount Rate (MDR) charges on Unified Payments Interface (UPI) transactions, arguing that protecting local businesses should take precedence over generating revenue from digital payments.

Speaking at a state-level retailers’ convention organised by the All India Mobile Retailers Association (AIMRA) in Udupi, Karnataka, on October 24, Annamalai called on the government to reconsider the policy and subsidise digital payment infrastructure rather than place additional costs on traders.

“UPI is like a hen that lays a golden egg every day. If you kill it expecting to get a hundred eggs at once, you will end up with nothing,” he said, warning that introducing charges could undermine a payment system that has become part of everyday life across India.

The remarks were made at Town Hall in Ajjarkad, Udupi, a coastal Karnataka district where the BJP has traditionally enjoyed a strong electoral presence. Annamalai, who began his career as an Indian Police Service (IPS) officer in the region, has since launched a political movement called We The Leaders.

Annamalai questions cost of UPI infrastructure

Annamalai said the estimated Rs 15,000 crore linked to the charges was relatively small compared with the Centre’s annual budget of around Rs 50 lakh crore.

He questioned why the government could not treat spending on UPI as an investment in the country’s economic growth.

"The government says that money is spent from the public exchequer to facilitate UPI transactions. But why can't the government consider this an investment in improving the country's economy?" he asked.

The Centre introduced a revised MDR framework in September 2026, ending the blanket zero-MDR regime for specified merchant transactions. Under the framework, a 0.4% MDR applies to eligible merchant payments above Rs 2,000, subject to prescribed caps and exemptions.

The government has maintained that customers will not be affected and that around 96% of merchant transactions will remain unaffected. Small merchants covered by the zero-MDR provisions will continue to be exempt.

The National Payments Corporation of India (NPCI) deferred the introduction of the revised charges on October 13 until after Diwali.

Annamalai argued that UPI's widespread adoption was driven in large part by the decision to keep transactions free in 2020. Its reach among rural users and people unfamiliar with English, he said, showed how accessible digital payments could change everyday commerce.

He also raised concerns about the impact of charges on businesses operating on narrow margins, calling on the Union Finance and Commerce ministries to work together to provide relief to small retailers.

He urged the government to consider subsidising payment infrastructure rather than placing additional costs on merchants.

Calls for stronger domestic retail and manufacturing

Annamalai's objections extended beyond digital payments to the wider impact of government policies on local businesses.

He said small retailers create jobs, keep money circulating within communities and contribute to regional economic growth. He also warned that profits generated by large corporations could flow abroad, limiting the economic benefits for local communities.

Calling for greater domestic manufacturing, Annamalai said India should move beyond the Centre's Make in India initiative towards what he described as "Make for India", with a stronger focus on domestic production and the needs of Indian consumers.

He urged local MPs to raise retailers' concerns in Parliament and press the Finance Ministry to ensure multinational companies operate within a framework that does not disadvantage smaller domestic businesses.

Annamalai's return to his former police posting

Annamalai's remarks in Udupi carry a local significance. He began his police career as Assistant Superintendent of Police in Karkala in September 2013 and took charge as Superintendent of Police of Udupi district on January 1, 2015. He served in the district until his transfer to Chikkamagaluru in July 2016.

He later served as Superintendent of Police in Chikkamagaluru and Deputy Commissioner of Police in Bengaluru South before resigning from the Indian Police Service in 2019.

Annamalai joined the BJP on August 25, 2020, and became the party's Tamil Nadu president in July 2021.

He held the post until April 2025, when Nainar Nagenthran succeeded him.

During his tenure, Annamalai sought to expand the BJP's presence in Tamil Nadu, where the party has struggled to challenge the dominance of the Dravidian parties.

Since stepping down from the leadership role, he has increasingly questioned decisions associated with the BJP and the Union government.

The BJP has maintained a strong electoral presence in coastal Karnataka, with party candidates repeatedly winning Assembly and parliamentary elections in Udupi and neighbouring Dakshina Kannada.

Annamalai's earlier police service in the region has given his return a distinct local resonance.