Annamalai urges Centre to shield small retailers from UPI charges in BJP stronghold Udupi

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, warning that imposing additional costs could undermine the digital payment ecosystem and hurt local businesses.

Speaking at a state-level retailers' convention organised by the All India Mobile Retailers Association (AIMRA) at Town Hall in Ajjarkad on October 24, Annamalai argued that the government should view UPI as an investment in the economy rather than a source of revenue.

“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.

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

“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, under which a 0.4 per cent charge applies to specified merchant transactions above Rs 2,000, subject to prescribed caps and exemptions. The government has maintained that customers will not be charged and that around 96 per cent 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 MDR framework until after Diwali.

Annamalai called on the Union Finance and Commerce ministries to work together to protect small traders, suggesting that the government subsidise payment infrastructure rather than impose additional costs on merchants operating on narrow margins.

He said UPI's widespread adoption had been driven by the decision to keep transactions free and had helped make digital payments accessible to rural users and people unfamiliar with English.

The former IPS officer also argued that local retailers generated employment, supported economic activity in their communities and contributed to regional growth. He called for stronger domestic manufacturing and urged the Centre to move beyond its Make in India initiative towards what he described as “Make for India”, with greater emphasis on domestic production and Indian consumers.

Annamalai asked local MPs to raise retailers' concerns in Parliament and press the Finance Ministry to ensure that multinational companies operated within a framework that did not disadvantage smaller domestic businesses.

His remarks carry particular significance in Udupi, where he began his police career as Assistant Superintendent of Police in Karkala in September 2013. He became Udupi's Superintendent of Police on January 1, 2015, and served until his transfer to Chikkamagaluru in July 2016.

Annamalai resigned from the Indian Police Service in 2019 and joined the BJP on August 25, 2020. He became the party's Tamil Nadu president in July 2021 and held the post until April 2025, when Nainar Nagenthran succeeded him.

At the Udupi event, Annamalai also called for more balanced development across Karnataka, arguing that growth should extend beyond Bengaluru. He criticised what he termed “poster culture” in politics and said parties should compete on the basis of development projects and improvements in public services rather than political publicity or promises of freebies.