HD Hyundai may start work on ₹40,000-crore Thoothukudi shipyard next month

The company, part of South Korea’s HD Hyundai Group, is expected to sign a definitive investment agreement with the Centre and the Tamil Nadu government after the ongoing state elections to set up a mega manufacturing facility at the Thoothukudi shipbuilding cluster, the people cited earlier said on condition of anonymity. The investment pact follows a memorandum of understanding (MoU) signed on 7 December 2025 by HD Hyundai with the Tamil Nadu government for the shipyard.

Project structure

HD KSOE is likely to invest about ₹40,000 crore in the project in phases, which is expected to have an annual production capacity of 3.5 million gross tonnage (GT). According to the first of the two persons cited earlier, the shipyard will build a variety of ships, including very large crude carriers (VLCCs) and very large gas carriers (VLGCs), marking a significant expansion of India’s shipbuilding capabilities.

Work on the project is expected to commence soon after the investment agreement is signed. The Korean firm plans to go largely solo through a wholly-owned subsidiary in India, the first person said. However, negotiations are also on to include State Industries Promotion Corporation of Tamil Nadu Ltd (SIPCOT) and the Centre’s Maritime Development Fund as minority equity partners for their role in providing land and part-funding of the shipyard.

HD Hyundai is among several global players, including Japanese and other Korean firms, invited to participate in India’s shipbuilding and ship repair mission, which aims to position the country among the world’s top five shipbuilding nations by 2047.

The ministry of ports, shipping and highways (MoPSW) is also engaged in talks with European shipbuilders, including Russian entities, for getting investment in India’s shipbuilding programme.

Queries emailed to HD Hyundai, MoPSW and Tamil Nadu government remained unanswered till press time.

Ecosystem impact

“Koreans are known for their shipbuilding skills. HD KSOE is an accomplished shipbuilding company. While it may take some time for this project to get off the ground, when it does, their investment in India will bring the most needed set of skills in shipbuilding, design and planning - all needed for India to become a ship building nation of some consequence,” said Anil Devli, chief executive officer of the Indian National Shipowners’ Association (INSA), a lobby group for Indian shipping companies.

The Thoothukudi shipbuilding cluster is spread over 3,000 acres. Apart from shipbuilding infrastructure including an over 300-metre dry dock (the area where the ship is taken out of water for inspection and repair) , the HD KSOE facility will also house several of the Korean entity’s vendors that have supported its shipbuilding enterprises globally.

"Globally, large shipbuilding hubs in cities like Ulsan, Busan and Yokohama have demonstrated how maritime infrastructure can anchor entire urban ecosystems. These locations evolved from industrial bases into fully integrated townships, with logistics, manufacturing, residential, and commercial clusters developing around the shipyards over time. India now stands at a similar inflection point. Shipyards and port-led infrastructure have the potential to act as catalysts for the next wave of urbanization with strong policy support and capital investment,” said Anshuman Magazine, chairman & chief executive officer (CEO), India, South-East Asia, Middle East & Africa, at global consulting firm CBRE.

“A shipyard usually creates a multiplier effect by driving demand for logistics parks, warehousing, housing, and social infrastructure, among others. Given India's long and strategic coastline, and proximity to major trade routes, this may deepen the country's role in the global supply chains. This is also likely to foster the rise of integrated, future-ready coastal cities,” he added.

Parallel projects

An official at a domestic shipbuilder said that HD Hyundai’s India move is a welcome development as many of these shipbuilding giants rarely look beyond their established manufacturing presence in their respective countries. “Korean shipbuilders would bring necessary technology for shipbuilding in India and, hence, their participation in India is important for the development of the industry,” The official said on the condition of anonymity, as the local shipbuilder is in talks with a Korean company to jointly build ships in India.

Apart from its participation in greenfield shipbuilding in India, HD Hyundai also plans to set up a large ship block fabrication facility with Cochin Shipyard Ltd. (CSL) on about 80 acres of land leased to CSL by Cochin Port Trust in Kerala.

The 3.5 million gross tonnage shipbuilding facility at Thoothukudi would be a very large project, almost equal to the combined capacity of 4-4.5 million GT planned by the Indian government for 3-4 other national shipbuilding clusters.

Gross tonnage denotes the size and total internal volume of a vessel. It measures the total internal volume of a ship, including all enclosed spaces such as cargo holds, engine rooms, crew quarters, and the bridge.

Policy support

Mint reported in August about the government's plan to attract investment worth ₹75,000 crore ( ₹25,000 crore each) in three shipbuilding clusters. Mint also reported in July that Indian state-run firms were looking to tie up with global shipbuilders. And last year in September, Mint reported that India is looking to Japan and Korea for shipbuilding initiatives.

India currently has shipbuilding capacity of just about 1,00,000 GT. According to the Maritime Amrit Kaal Vision 2047, India aims to be in the top 10 in ship ownership and shipbuilding by 2030 and in the top 5 by 2047. Thus, by 2047, India needs to increase its ship ownership (Indian-flagged ships) 7-times to 100 million GT (from about 14 million GT now) and shipbuilding output 40-times to 4.5 million GT by 2047.

India’s share in global shipbuilding remains below 1%, even though the country has 28 shipyards. Most large commercial vessels used by Indian entities are built overseas, and a substantial portion of ship repair work is also undertaken abroad.

To address this gap, the government has unveiled a multi-pronged strategy. The Union Budget 2025-26 announced a ₹25,000 crore Maritime Development Fund to support shipbuilding and shipbreaking clusters. The existing Shipbuilding Financial Assistance (SBF) scheme has also been revamped to address cost disadvantages, and large ships have been included in the infrastructure harmonised master list to ease financing.

The government has also proposed the development of four mega shipbuilding parks—two each on the east and west coasts.

Subhash Narayan

Subhash is the infrastructure editor at Mint and tracks the momentous developments taking place in the space that is fast changing the Indian landscape. He finds reporting to be a passion that provides the necessary adrenaline rush and keeps you going.