Ulsan in Thoothukudi: TN’s shipbuilding policy aims high

Darez Ahamed, the MD of Guidance Tamil Nadu, the State government’s nodal investment promotion agency, often muses on the big picture of issues. He opines that every nation that shifts course to a high growth path towards becoming fully developed takes up merchant shipbuilding.

Shipbuilding moved from Europe to the U.S., then to Japan, followed by South Korea and China. These happened just as the nations became highly advanced.

Vietnam and Philippines started shipbuilding in a major way recently. “It’s now India’s turn. And Tamil Nadu is taking the lead,” said Mr. Ahamed two days after the State unveiled its shipbuilding policy this week.

Tamil Nadu’s merchant shipbuilding policy contains a raft of measures towards attracting investment and facilitating the building of modern shipyards. A Special Purpose Vehicle, NSHIPTN, under SIPCOT with Union government as major stakeholder will develop infrastructure, enter into joint ventures, lease assets, facilitate capital raising and so on. The State government can participate in equity (up to 49%) in shipyards or lease assets up to 20% of project cost. Straight off capex subsidies as proportions of fixed assets, 2% interest subvention and PLI schemes are other incentives. The government has promised support to a range of activities including setting up the supply chain, training and supplying the manpower, and housing for yard staff.

Guidance officials say a college dedicated to training engineers on shipbuilding as well as institutions for skilling on shipbuilding trades such as welding, erection and electric work will be started. The government college will also train seafarers.

Two clusters are planned to come up: one in Thoothukudi and another in Cuddalore. More than 3,000 acre of land belonging to SIPCOT have been identified for the shipyard in Thoothukudi.

Two companies will construct and operate shipyards there. The government has already signed an MoU with Korean Hyundai, among the most advanced shipyard companies in the world, for Thoothukudi project. A public sector shipyard such as Cochin Shipyard or Mazagaon may develop the other yard in Thoothukudi.

Mr. Ahamed says the vision is to bring Ulsan to Thoothukudi. Ulsan is among the most advanced shipyards in the world and is operated by Hyundai.

Ulsan is a mini city that offers nearly every piece of shipyard operation: from design houses through assembling the ship to manufacturing almost all the cutting edge components including the precision engineered engines, boilers and other equipment, says Girish Sehgal, marine chief engineer who has dealt with shipyards in Korea, China and Japan for nearly 15 years. “The vision is great. Ulsan is top class. They have licenses to manufacture all the state-of-the-art equipment too, the supply of which have lead times affecting ship delivery schedules,” says Mr. Sehgal.

Tamil Nadu is India’s most advanced manufacturing hub and this policy has come at an appropriate time, says Hrishikesh Narasimhan, who served as general manager and head of production at the L&T shipyard in Kattupalli and is now vice president at the Swan Defence shipyard in Pipavav. Mr. Narasimhan has a word of caution, though. He says project management is a weakness in India and while Hyundai’s expertise in shipyard is proven, the whole project should be managed well enough to succeed.

It’s not that India has no knowhow in merchant shipbuilding. India does have a history of shipbuilding especially in the public sector such as Cochin Shipyard Limited. But these projects had been marked by delays and cost overruns.

In the last two decades, merchant shipbuilding had almost ground to a halt, but the Union government seems keen on ramping it up now. In budget announcements and policy briefs, it has talked about setting up maritime clusters to support shipbuilding and announced incentives.

Mr. Ahamed may well be right in the importance he gives to shipbuilding in a nation’s development. Merchant shipbuilding requires a humongous industrial ecosystem and draws upon a nation’s deepest of resources, talents, skills and abilities. It requires industrial strength starting with manufacture and assembly of high-quality steels.

Guidance officials assure the state already has suppliers who can forge the ship grade steel to make the hull frames of ships. These frames need to be made in complex ships designed to reduce seawater resistance and ensure the ship is cruising at top speed in the ocean. There is a plan to even make the special grade steel for ships within the state, not just forge it into complex shapes.

But steel is only the starting point. Mr. Sehgal describes the operation of a top performing yard, saying they take only 15 months from steel cutting to the ship entering the water. This is done like in building construction: pre-fab units are made in separate berths near the drydock area and lifted by cranes of 1,000 ton capacity and more to the yard where they are welded together. “Yards work round-the-clock. At any point of time, there are some 2,000 people on a ship in China where the welding is done manually. In Korea, some 500 people work in a ship at any time since they use robotic welding. Shipyard work is an intense welding job along with painting, machinery installation and testing, safety system installation, as well as involved electrical work,” he says, adding Hyundai would bring its own people initially and slowly hand over to Indians as and when they are available and highly trained. “India’s goal should be technology transfer,” he adds.

The ecosystem of a yard functioning at its top capacity will need a township of several thousand employees. “An important reason for the state promoting shipbuilding is job creation. For every person working in a yard, the job creation is rate 6.5x,” says Arun Roy, Secretary to the Commerce and Industries Department, Tamil Nadu.

While yards in Korea and Japan reject some orders because of capacity issues, China tends to not pass up on orders so it stays the dominant force in shipbuilding. China today builds half of all merchant ships built in the world. “They give unbeatable 30% discounts straight off,” says Mr. Sehgal.

Mr. Narasimhan adds that China will not take kindly to having India take up merchant shipbuilding in a big way. “Our costs will come down only when the volumes are up. For that the government has to order merchant ships from Indian yards in a big way to prime the pump,” he adds.

The Union government has talked about buying 100 new merchant ships over the years. Joint ventures involving oil and gas companies and shipping firms will make the orders. If Indian yards are ready by then, then Indian orders may alone get India’s shipbuilding off the ground.

Mr. Sehgal has another word of caution. In his experience, shipyards in the East have at least 25% women staff. Going beyond traditional jobs such as admin, design and soft work, yards prefer to employ women in crane operation and specialized welding since these call for patience, focus and diligence. “Smoke breaks and boredom-driven irritation can be costly,” he says, adding India should not see shipbuilding as a masculine activity as that will bring down safety and increase reject rates.

Perhaps Tamil Nadu’s record in gender empowerment may come in handy. Thoothukudi may well have a chance to becoming India’s Ulsan then.

Published – March 07, 2026 08:20 pm IST