HD Hyundai is advancing plans for a shipyard in Thoothukudi, India, as it seeks to establish the country as an overseas production base for tankers and bulk carriers.
HD Korea Shipbuilding & Offshore Engineering (HD KSOE) signed a memorandum of understanding in April with an Indian government special purpose vehicle and state-run Sagarmala Development Company to develop a shipyard in Thoothukudi, Tamil Nadu.
The proposed shipyard would have an annual capacity of 2.5 million GT. The parties are preparing detailed business plans for the project. The Indian side would develop a shipbuilding cluster and shared infrastructure, while HD Hyundai would invest in and operate the shipyard facilities as a key investor.
Estimates in India put total investment for the Thoothukudi shipyard at up to $4 billion. V.O. Chidambaranar Port Authority has recently issued a tender to prepare a detailed project plan for the shipbuilding cluster.
HD Hyundai plans to use India as an overseas production base for tankers and bulk carriers. The approach follows its overseas production strategy in Vietnam and the Philippines, with Korean shipyards focusing on high value-added vessels and overseas yards handling standard commercial ships facing intense price competition.
HD KSOE dropped a plan last month to establish a hull block plant joint venture with Cochin Shipyard Limited and is continuing discussions on the Thoothukudi project.
An HD KSOE official said the company sees a need to concentrate its efforts and is continuing discussions with the Thoothukudi side. The official also cited demand from the Indian government and the aim of securing cost competitiveness through an overseas production base.
HD Hyundai is also considering handling initial construction volumes in South Korea while training Indian personnel at its Korean shipyards before the Thoothukudi facility begins operations. After gaining production and operational experience in South Korea, the personnel would be deployed to the Indian shipyard as local production begins.
The project comes as India seeks to expand its national fleet and domestic shipbuilding industry. According to the Directorate General of Shipping, public-sector ship demand compiled by the Indian government totals 437 vessels, representing about 19 million GT.
The planned vessels include 267 bulk carriers, tankers and container ships to be introduced by Shipping Corporation of India (SCI) by 2047, along with 59 vessels for state-owned oil and gas companies, 100 eco-friendly tugboats for major ports and 11 dredgers for a state-run dredging company.
The total of about 19 million GT is 36% above India’s existing merchant fleet of 14.02 million GT. Expected investment is 2.2 trillion rupees, and 62 of the vessels are due to go to tender by March next year.
India-flagged vessels carried 6.08% of the country’s overseas cargo last year, while annual freight payments to foreign shipping companies amount to about $75 billion.
The Indian government is supporting domestic ship construction as it seeks to expand the national-flag fleet and develop local shipbuilding capacity. Support for vessels built locally amounts to 15%–25% of the contract price, alongside government investment in shared shipyard infrastructure.
According to SK Securities, hourly labour costs at Indian shipyards are $3–$4, below the level in China. However, labour cost per corrected gross ton (CGT) is $620 in India, compared with $300 in China.
SK Securities analyst Han Seung-han said cost competitiveness would be important for Korean shipbuilders seeking to regain tanker and bulk carrier market share from China. He identified expansion of overseas production bases as a way to increase construction volumes.
Other shipbuilding cooperation is also being pursued in India. Samsung Heavy Industries is working with Swan Defence on local cooperation covering ship design, procurement and production management. Tamil Nadu, Andhra Pradesh and Gujarat are also pursuing large shipbuilding clusters and seeking to attract global shipbuilders.
