South Korea’s HD Hyundai is working on plans to establish a $4 billion greenfield shipyard at Thoothukudi in Tamil Nadu, a project that could transform India’s shipbuilding landscape. The facility, being developed through its shipbuilding holding arm HD Korea Shipbuilding & Offshore Engineering (HD KSOE), is expected to have an annual production capacity of 3.5–4 million gross tonnage (GT)—a scale that rivals the combined output envisioned for several proposed Indian shipbuilding clusters.
According to a government official familiar with the discussions, the scale of the proposed yard is striking when compared with the government’s own estimates. “What we had proposed was that all the three to four shipbuilding clusters together would produce about 4–4.5 million GT, but what HD Hyundai is planning is nearly 4 million GT on its own. That will be huge,” the official said.
The project aligns with India’s long-term maritime ambitions. The government aims to place the country among the world’s top 10 in ship ownership and shipbuilding by 2030 and in the top five by 2047. To achieve that goal, India plans to increase ship ownership sevenfold to 100 million GT and expand shipbuilding output 40 times to around 4.5 million GT by 2037.
MoU with Tamil Nadu
On December 7, 2025, HD Hyundai signed a memorandum of understanding with the Tamil Nadu government to explore the shipyard project. While details were not disclosed at the time, discussions since then have progressed significantly. A 15–20 member technical team from HD Hyundai is currently stationed in Thoothukudi, and Indian officials have been visiting South Korea to work through project specifics.
The Thoothukudi yard is separate from another initiative by the company—a block fabrication facility planned jointly with Cochin Shipyard Ltd in Kochi.
Ownership and Funding Structure
The project is expected to be largely led by HD Hyundai, with support from India’s Maritime Development Fund (MDF).
Under the proposed structure:
HD Hyundai will hold the *majority stake in the project.
SIPCOT (State Industries Promotion Corporation of Tamil Nadu) may take 10–12% equity, corresponding to the value of land and infrastructure provided by the state government.
The Maritime Development Fund* could acquire 20–25% equity.
The Sagarmala Finance Corporation Ltd* has already issued a Request for Proposal (RFP) to appoint a fund manager for the ₹25,000 crore Maritime Development Fund, which will operate as a separate trust once established.
Substantial Government Support
The project’s financial viability is expected to be strengthened by multiple layers of government incentives.
The Union government will contribute 10–12% of the project cost toward infrastructure under the Shipbuilding Development Scheme.
The Tamil Nadu government will provide a 25% industrial subsidy on capital expenditure for the new shipyard.
The state will also support the project with *land and infrastructure valued at another 10–12% of project cost.
Together, these measures amount to 45–47% subsidy on project cost. In addition, ships built at the yard will qualify for a 15–25% shipbuilding subsidy or production-linked incentive from the Union government.
Officials say the support is necessary because shipbuilding is typically a low-margin industry, but it has significant strategic importance due to its multiplier effects on manufacturing, employment and maritime capabilities.
Building a Shipbuilding Ecosystem
Beyond the shipyard itself, the project is expected to anchor a 3,000-acre shipbuilding cluster in Thoothukudi, designed to host a wide network of suppliers and ancillary industries.
HD Hyundai plans to bring its entire shipbuilding vendor ecosystem to the cluster. The Tamil Nadu government is also in discussions with South Korean steel giant POSCO about establishing a steel plant to supply shipbuilding and automotive industries.
Additionally, HD Hyundai has signed an MoU with BEML Ltd to collaborate on manufacturing maritime cranes, which could also be produced within the cluster.
Why Thoothukudi
According to officials, HD Hyundai selected Thoothukudi after evaluating multiple locations across India.
Key factors included:
Tamil Nadu’s strong industrial ecosystem, which has already attracted South Korean companies such as Hyundai Motor and Samsung Electronics.
Favourable climatic conditions, including relatively lower salt content in the air—considered beneficial for shipbuilding infrastructure.
Geographical protection from cyclones, as the location is partially shielded by Sri Lanka.
The shipyard itself is estimated to cost $4 billion, while infrastructure for the broader cluster—such as breakwater construction and dredging—could require an additional ₹4,000 crore.
If realized, the Thoothukudi project would become one of the largest shipbuilding investments in India, potentially positioning the country as a major player in the global maritime manufacturing industry.
