A major shipbuilding investment planned for Tamil Nadu’s Thoothukudi has become the subject of controversy after questions were raised over the process through which South Korean shipbuilding giant HD Hyundai was brought in as the proposed anchor shipyard for the State’s ambitious greenfield shipbuilding cluster project, as reported in The Hindu.
The controversy has gained further attention after state-owned Mazagon Dock Shipbuilders Limited (MDL), which had earlier committed to investing ₹15,000–18,000 crore in a greenfield shipyard project in Thoothukudi, began exploring an even larger investment opportunity in neighbouring Andhra Pradesh.
MDL had signed a Memorandum of Understanding (MoU) with Guidance Tamil Nadu on 19 September 2025, for establishing a greenfield shipyard on India’s eastern coast. During the Government of India’s “Samudra se Samriddhi” event in Bhavnagar, both MDL and Cochin Shipyard signed agreements with the Tamil Nadu government for greenfield shipyard projects in Thoothukudi, with a combined proposed investment of around ₹30,000 crore.
In November 2025, during its Q2 FY26 earnings call, MDL publicly referred to its proposed Thoothukudi shipyard project and stated that it envisaged an investment of ₹15,000–18,000 crore. The project was planned as a 1,050-acre greenfield shipyard to be developed over a period of 10 to 12 years, targeting very large crude carriers (VLCCs) of up to 3,00,000 deadweight tonnage (DWT).
According to available information, MDL had secured board approval for the project and was awaiting further action from the Tamil Nadu government, including the issuance of an Expression of Interest (EoI) process through the Special Purpose Vehicle (SPV) that was expected to oversee the development of the cluster.
However, developments took a different turn in December 2025.
On 7 December 2025, South Korean shipbuilding company HD Hyundai announced the signing of what it described as an “Exclusive Business Cooperation Agreement” with the Government of Tamil Nadu for the development of a new shipyard in Thoothukudi. The announcement was made during the TN Rising Investment Conclave in Madurai in the presence of then Chief Minister MK Stalin.
HD Hyundai described the proposed project as a plan to create a “second Ulsan” in Tamil Nadu, with reports placing the potential investment between $2 billion and $4 billion.
The agreement has since come under scrutiny because the Union Government’s Shipbuilding Development Scheme (SbDS) Guidelines had not yet been formally notified when the agreement was signed.
The Ministry of Ports, Shipping and Waterways (MoPSW) notified the Shipbuilding Development Scheme Guidelines only on 26 December 2025 – nineteen days after HD Hyundai signed the exclusive cooperation agreement with the Tamil Nadu government.
The guidelines laid down a sequential process for the development of greenfield shipbuilding clusters, including the mechanism through which anchor shipyards would be selected.
Questions have therefore been raised over why HD Hyundai was allegedly chosen as the anchor shipyard by the DMK government before the governing framework had come into existence.
Further questions have also been raised regarding the timing of the creation of the Special Purpose Vehicle responsible for implementing the project.
It is the DMK government which brought in a foreign company without taking Mazagon Dock in loop.
Why “HD Hyundai was allegedly exclusively selected as the Anchor Shipyard before the rules governing the selection process existed, and before the institution (the SPV) required to… pic.twitter.com/eRL96NHhgD
— Savukku Shankar (@SavukkuOfficial) June 9, 2026
In January 2026, the National Shipbuilding & Heavy Industries Park Tamil Nadu (NSHIP TN) was formally incorporated as a 50:50 joint venture between the V.O. Chidambaranar Port Authority (VOCPA) and SIPCOT.
It is argued that HD Hyundai was allegedly selected as the anchor shipyard before the SPV that was supposed to oversee such a selection process had even been incorporated.
The controversy has intensified because the project is considered strategically significant. Thoothukudi has been identified by the Government of India as one of the country’s premier locations for a greenfield mega shipbuilding cluster due to factors such as extensive coastal land availability, natural cyclone shielding, lower atmospheric salinity, proximity to international shipping routes, and the presence of an existing deep-water port.
The proposed cluster is intended to develop approximately 1.2 million gross tonnage per annum of shipbuilding capacity and is expected to receive substantial support from both the Union and State governments.
The developments have also prompted questions about whether Indian shipyards were given an adequate opportunity to compete for the project through a transparent bidding process, particularly at a time when the Government of India is emphasising indigenous manufacturing under the Maritime Amrit Kaal Vision 2047.
Against this backdrop, MDL has now turned its attention towards Andhra Pradesh.
Having failed to secure the Tamil Nadu project, MDL has reportedly expressed interest in becoming the anchor investor for a proposed mega shipbuilding cluster in Andhra Pradesh. The company is now considering an investment exceeding ₹29,000 crore and is expected to undertake a feasibility study for developing a shipbuilding capacity of approximately 1.2 million tonnes at the proposed cluster.
The shift has fuelled allegations that Tamil Nadu may have lost a major investment opportunity from one of India’s leading public-sector shipbuilders after the State chose to move ahead with HD Hyundai.
The Tamil Nadu government was approached with a detailed set of questions regarding the project, the selection process, and the timeline of events. However, no response was received.
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