HD Hyundai To Go Solo on $4 Billion Greenfield Shipyard in Tamil Nadu

Chennai:

Port Wings News Network:

HD Korea Shipbuilding & Offshore Engineering (HD KSOE), the holding company of South Korea’s HD Hyundai’s shipbuilding and offshore division, is working out the finer details of a plan to set up a $4 billion greenfield shipyard on its own at Thoothukudi in Tamil Nadu with a capacity to produce 3.5 to 4 million gross tonnage (GT) a year, says a report published in ET Infra.

The scale of ambition of the world’s biggest shipbuilder for the Thoothukudi yard should be seen from the context of the government’s assessment that all the proposed 3-4 shipbuilding clusters, spread across Tamil Nadu, Andhra Pradesh, Gujarat and Maharashtra or Odisha, put together will produce about 4-4.5 million GT, a government source with knowledge of the discussions said.

“What we had proposed was that all the 3-4 shipbuilding clusters put together will do 4-4.5 million GT but what HD Hyundai is planning is they will themselves do 4 million GT. That will be huge,” the source said.

India aims to be in the top 10 in ship ownership and shipbuilding by 2030 and in the top five by 2047. Thus, by 2047, India needs to increase its ship ownership seven times to 100 million GT and shipbuilding output 40-times to 4.5 million GT by 2037.On December 7, 2025, HD Hyundai signed a memorandum of understanding with the Tamil Nadu government to set up a shipyard, but the details were not known.

To be sure, the Thoothukudi shipyard project is different from the block fabrication facility that HD Hyundai plans to set up jointly with Cochin Shipyard Ltd at Kochi.

“What HD Hyundai has committed is they want to set up a greenfield shipyard at Thoothukudi practically on their own. The Maritime Development Fund will probably join them,” the source said.

“Our team had gone to South Korea, and they are going again this month. A 15-20-member technical team from HD Hyundai is currently stationed in Thoothukudi,” he revealed.

The Sagarmala Finance Corporation Ltd has floated a Request for Proposal (RFP) to engage a fund manager for the Rs 25,000 crore Maritime Development Fund (MDF). The fund manager will be picked in a month or so after which the Sagarmala Finance Corporation will continue to be the nodal agency, but MDF will become a separate trust and have its own fund manager, the government source said.

The MDF will invest into shipyards such as the National Shipbuilding & Heavy Industries Park, Tamil Nadu (NSHIP, TN), an equal joint venture between Union government-owned VO Chidambaranar Port Authority and the State Industries Promotion Corporation of Tamil Nadu Ltd (SIPCOT).

“SIPCOT may take a 10-12 per cent stake in the greenfield shipyard, equivalent to the value of the land and the infrastructure that the state government is providing based on valuation, MDF will likely pick 20-25 per cent equity, and HD Hyundai will hold the majority stake. It practically wants to go solo” the government source said.

“On the overall package, the Union government is giving 10-12 per cent of the project cost towards infrastructure creation through the Shipbuilding Development Scheme. The TN government is giving an industrial subsidy of 25 per cent on the capex cost to the new shipyard. The state government will also contribute a further 10-12 per cent of the project cost for land and other infrastructure. So, it comes to 45-47 per cent subsidy on the project cost. Plus, whatever is produced, the Union government will give 15-25 per cent as shipbuilding subsidy or production-linked incentive. Together, the economics will work out,” the government source said, noting that shipbuilding was inherently a low margin business but assumes strategic importance given its multiplier effect on ancillary industries and employment generation.

The Thoothukudi shipyard project is estimated to cost some $4 billion while the infrastructure for the cluster such as breakwater, dredging etc will cost another $4,000 crore.

Building an entire ecosystem

Besides taking on the mantle of the anchor shipyard in the Thoothukudi shipbuilding cluster, HD Hyundai is also planning to bring its entire shipbuilding vendor ecosystem there.

“The cluster spread over some 3,000 acres will also accommodate vendors. HD Hyundai has told the TN government about the companies who want to set up plants there and the state government will reach out to them by offering incentives for setting up units. The state government is already talking to the South Korean steel giant POSCO to see if they can be given a good package to set up a steel plant there,” the government source said.

POSCO, one of the world’s largest steel makers, is a key supplier to South Korea’s shipbuilding and automobile industries.

HD Hyundai is also looking to set up a maritime crane manufacturing unit in the Thoothukudi shipbuilding cluster. The South Korean shipbuilder has already signed a memorandum of understanding in December 2025 with state-owned BEML Ltd to collaborate on making maritime cranes.

HD Hyundai picked Thoothukudi for setting up the shipyard for multiple reasons.

“One is the overall government ecosystem in Tamil Nadu that has created a conducive climate for heavy industries, attracting top South Korean companies such as Hyundai Motor Company and Samsung Electronics. They are comfortable with the TN government. Second is the location; they felt that Thoothukudi is probably the best location in terms of the overall climatic conditions with less salt content in the air, considered vital for shipbuilding. Third, it is also shielded by Sri Lanka and so is not impacted by cyclones. In the event of a natural disaster, the yard is protected. Thoothukudi scored over locations in at least three other states on all these factors put together,” the source stated.