Mazagon Dock Shipbuilders Ltd (MDL) has called off its proposed shipyard project in Thoothukudi, with the availability of preferred land emerging as a key issue.

The land parcel sought by the public sector unit MDL was also being considered for Korean shipbuilding major HD Hyundai’s proposed shipyard. Given the significantly larger scale of HD Hyundai’s proposed operations, the Tamil Nadu government decided to prioritise the site for the Korean company, sources said.

Sources in both the MDL and the Tamil Nadu government confirmed that MDL had called off the project at Thoothukudi.

In September 2025, MDL signed an MoU with the Tamil Nadu government to establish a shipyard in Thoothukudi at an investment of ?15,000 crore to ?18,000 crore. However, delays in obtaining the necessary approvals and the uncertainty over the land parcel have prompted the public sector company to pursue projects elsewhere, said sources.

MDL recently signed an agreement with the Andhra Pradesh government to develop a ?15,000-crore greenfield shipyard at Dugarajapatnam. The project is expected to generate around 45,000 direct and indirect jobs. MDL also plans to invest around ?27,000 crore in a greenfield shipbuilding cluster at Dighi in Maharashtra’s Raigad district, which is expected to generate around 90,000 jobs.

Land at the centre of dispute

Sources in the Tamil Nadu government said the principal issue in Thoothukudi was the land parcel identified for MDL.

“Given the significantly larger scale of HD Hyundai’s proposed operations, its global shipbuilding capabilities and the potential for it to serve as an anchor investor for the wider shipbuilding ecosystem, not only for Tamil Nadu but for India, the Government decided to prioritise the site for the HD Hyundai project,” the sources said.

The State is said to have subsequently offered MDL alternative land parcels at other suitable locations in Tamil Nadu. However, MDL has not yet responded to the alternatives. The government sources said they remain open to working with MDL on alternative locations.

Meanwhile, the Korean company HD Hyundai has stepped up work on the project, with a high-level delegation recently visiting Thoothukudi to inspect the proposed site. Senior company officials also met Tamil Nadu Chief Minister C Joseph Vijay.

Anchor investor

The development comes as the Centre plans to establish five greenfield shipbuilding clusters at strategic locations along India’s coastline, with 100 per cent central capital assistance proposed for developing common infrastructure.

Thoothukudi has emerged as the most advanced of the five proposed clusters, according to the Directorate General of Shipping. The cluster is planned over 2,050 acres, with a 2.4 km waterfront and a draft of about five metres. It is being developed adjacent to V.O. Chidambaranar Port.

Source: The Hindu Business Line

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