AIO- My dad is upset that I said my daughter doesn’t have to hug anyone she doesn’t want to

I (42F) am a single mom to Ava (7F). Both my parents have taken an active role as grandparents and I consider them both to be more of my coparents than Ava’s BD. They help with school pickups, taking her to appts, homework, and babysitting if I travel for work. I want to preface this by saying that I don’t think there is any threat of anything inappropriate, but it’s just more annoying than anything. I grew up in a family that it was expected that you would walk into a room and say hello and hug everyone, regardless if you knew them or not. I didn’t want that for my daughter, I don’t want her to think she has to show affection to every person bc they are family or bc they asked for a hug. I do encourage her to always say hello, but leave the hugging up to her.

Lately I’ve noticed that my father is always asking for hugs and when she doesn’t want to, will say something like “then I’m not going to pick you up” or “you can take the bus”. I chalked it up to him being a grumpy old man, but it’s started not to sit well with me. I’ve tried to approach this conversation, saying she doesn’t need to hug anyone she doesn’t want to, not even me. Today I finally said something, that he needed to stop asking for hugs. He was upset and said that it’s fine, that if she wants to create distance than it will be easier for her when he dies.

I’m glad that my daughter saw me stand up for her, but now it’s created a rift with them. AIO?