South Korean shipbuilding giant HD Hyundai Heavy Industries plans to build a new shipyard in India, a move that will have far-reaching implications for the Indian shipbuilding industry.
Indian media reported that HD Hyundai Heavy Industries recently conducted a field trip to Tamil Nadu, India, to find a suitable site for a shipyard. During the visit, HD Hyundai Heavy Industries met with Indian multinational Larsen & Toubro (L&T). Both parties discussed the potential cooperation between HD Hyundai Heavy Industries and L&T’s Kattupalli Shipyard.
Apart from Tamil Nadu, several other Indian states – Andhra Pradesh and Maharashtra – are also said to be fighting for HD Hyundai Heavy Industries to build plants there. “The competition among the states is now very intense,” said a source familiar with the developments.
The specific investment amount of HD Hyundai Heavy Industries’ Indian shipyard has not yet been determined, and with reference to the previous experience of the US$550 million project in the Philippines, the scale of investment is expected to be between US$100 million and US$500 million. The shipbuilding giant believes that India’s lower labor costs and government incentives can create a higher profit margin for the enterprise. In addition, HD Hyundai Heavy Industries can further save investment costs if it cooperates with L&T.
The entry of HD Hyundai Heavy Industries comes at an opportune time as the Indian government is working to enhance the country’s position in the global shipbuilding industry. Currently, India’s share of the global shipbuilding market is less than 1%, but it is aiming to be among the world’s top ten by 2030 and top five by 2047. The Indian government also plans to set up new shipping companies and expand its fleet size by at least 1,000 ships within a decade, with a view to reducing external shipping costs by one-third by 2047.
The revised Shipbuilding Financial Assistance Policy provides 20-30% financial support for environmentally friendly and specialized ships, and plans to provide Indian shipyards with a total of about Rs. 10,000-15,000 crore ($11.4 billion-$17.1 billion) in shipbuilding subsidies by 2035.
The market demand for ships is increasing with the tightening of environmental regulations and the growth of trade volume. Most of the major shipyards around the world are producing at full capacity, and expansion of production capacity is a top priority. HD Hyundai Heavy Industries has tried to establish a shipyard in the Philippines but faced challenges. Indian media said, “India is now prioritizing the development of the local shipbuilding industry, which is an ideal opportunity for HD Hyundai Heavy Industries to set up a shipbuilding base outside of Korea.”
HD Hyundai Heavy’s layout in India will reportedly drive a 200% increase in the size of India’s shipbuilding support industry, create more than 50,000 high-skilled jobs, “and boost India’s construction capacity in the field of high value-added ship types such as LNG carriers to the top eight globally.” Most importantly, “HD Hyundai Heavy’s investment will help India acquire advanced shipbuilding technology and enhance shipowners’ confidence in Indian shipyards.”