Greenfield Shipyard in Thoothukudi: Southern port to develop

Long known as the ‘Pearl City’, Thoothukudi is constantly forging a new identity and rediscovering its long-ignored potential to become a major marine manufacturing hub in Tamil Nadu. The proposed greenfield shipyard in the district is intended to anchor a new industrial ecosystem in southern Tamil Nadu. The comparison being made these days is with Ulsan, a South Korean industrial city known for its shipbuilding and wider industrial ecosystem. Thoothukudi is moving towards this path due to its strategic location and industrial base, with the proposed mega shipyard expected to act as a catalyst.

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With an investment of around ₹ 38,000 crore and an anticipated annual capacity of 2.5 million gross tonnage (GT), the project is among the major industrial projects proposed for southern Tamil Nadu. However, its importance is expected to extend beyond the shipyard itself, with ancillary industries and supporting manufacturing and service activities expected to develop around the berth.

Recently, a tripartite Memorandum of Understanding (MoU) was signed for the construction of India’s first major greenfield shipyard at Thoothukudi. A memorandum of understanding was signed between HD Korea Shipbuilding & Offshore Engineering Co Ltd (HD KSOE); National Shipbuilding and Heavy Industries Park, Tamil Nadu Limited (NSHIP-TN), a Special Purpose Vehicle (SPV) jointly supported by VO Chidambaranar Port Authority and State Industries Promotion Corporation of Tamil Nadu (SIPCOT); and Sagarmala Finance Corporation Limited (SMFCL), a Government of India undertaking under the Ministry of Ports, Shipping and Waterways.

According to a revenue official, around 1,700 acres of land has been identified in the revenue villages of Mullakadu (1), Mullakadu (2) and Pazhayakayal in the first phase. The identified land includes 1,660 acres of government poramboke land and 40 acres of patta land.

The project recently moved beyond the conceptual stage and work continued on the Detailed Feasibility Report (DFR). VOC Port Authority issued a work order for DFR in consultation with HD KSOE and initial work has started at the proposed site. At the same time, a Request for Proposal (RFP) was issued inviting global consultants to prepare a Detailed Project Report (DPR) that brings international expertise to planning and the wider marine manufacturing ecosystem.

Government regulation

A government order to transfer around 1,700 acres for the first phase has been awarded to SIPCOT, which will develop the common infrastructure along with the VOC Ports Authority.

However, the significance of the project lies beyond the shipyard itself. A large shipyard can generate demand for a network of industries dealing with steel production, marine equipment, electrical systems, welding, machinery and several others. Such an ecosystem, if successfully developed, could create opportunities for small and medium enterprises in and around Thoothukudi district and potentially extend the industrial impact to neighboring districts. It is this multiplier effect that makes the Ulsan comparison significant. But such a transformation also comes with questions about land, livelihoods and recovery.

There were concerns about the extent of saline soils in the proposed project area and the potential impact on the livelihoods of salt workers, producers and fishermen. Of the 1,660 acres of government poramboke land available, 455 acres were leased to Tuticorin Alkali Chemicals and Fertilizers Limited, a sister concern of SPIC, Thoothukudi, and 300 acres to salt pan manufacturers operated by Kovalam Thanpaadu Uppu Uppu a07 Napathynagaladam Sanrum. More than 150 acres used by the salt producers is said to be poramboke watercourse land, according to details available with the revenue department.

Enumeration in affected area

A revenue official said the district administration has taken an enumeration of people dependent on the affected area, including salt pan workers, fishermen families and salt manufacturers. He said the enumeration identified about 50 families of fishermen, 350 families of laborers, 447 laborers and 109 salt makers. He said the officials discussed with the stakeholders of the proposed site about the rehabilitation and compensation measures suggested by the government. He added that the proposed package includes patties and government-built Pucca houses, one-time resettlement assistance and support for fishing boats and outboard motors for affected fishing families.

For salt producers, the package includes alternative sites in the Vaippar region, development of basic infrastructure for salt production and one-time resettlement assistance along with other assistance. While for the salt pan workers, rehabilitation measures include skill development and training in maritime and allied fields, priority job opportunities in anchorage and ancillary sectors and employment opportunity for one eligible member of each family in the industrial cluster or financial assistance through one-time lump sum assistance. The official noted that the Ministry of Finance has recently submitted an estimate of funds needed to implement rehabilitation measures and address other demands raised by stakeholders. For a project that promises to create a new industrial economy, ensuring that the people whose livelihoods are affected can participate in that new economy will be a crucial component.

The proposed project is expected to create 15,000 direct jobs after stabilization, in addition to thousands of jobs in associated industries. The scale of job creation could potentially make skills development one of the most important components of the project. This is expected to boost the port economy of the state and position Thoothukudi as one of the major maritime industrial clusters in the country.

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Thoothukudi has a long relationship with the sea. People in the coastal belt have experience in fishing, ship building and sea related activities. However, building large commercial vessels requires specialized skills in areas such as coded welding, steel fabrication, electrical work, and several other specialized trades. This raises a key question: will there be skills development training for local youth?

Susanta Kumar Purohit, chairperson of the VOC Port Authority, said it has already proven that industry-linked training can lead to employment. He added that in the skills development programs provided by the port authority, a special curriculum will be developed to cover areas such as coded welding, steel fabrication and pipe fitting so that local youth can be trained for the job opportunities expected in and through the proposed shipyard.

A senior Guidance Tamil Nadu official said that human resource requirements were also actively discussed and arrangements would be made to develop the manpower required for the project.

Focus on job opportunities

If the proposed shipyard is to become an anchor for the southern economy, its benefits will depend in part on how effectively local students and youth are connected to emerging job opportunities. At the same time, the project could create demand for a new generation of small and medium-sized enterprises.

Sankar Marimuthu, President, All India Chamber of Commerce and Industry, Thoothukudi, said familiarity of the people in and around Thoothukudi with the construction of country boats and mechanized fishing boats could provide a better basis for developing the manpower required for the shipbuilding industry. He added that the proposed shipyard could transform the livelihoods of people in the region by creating opportunities beyond traditional industries. “Through VinFast, an e-vehicle manufacturer, we are slowly creating an ecosystem for the automotive industry in Thoothukudi. Similarly, the proposed shipyard can take the district to a higher level with further growth in the GDP of southern districts and the state,” he said.

Faster industrial growth

Edwin Samuel, former chairman of the Confederation of Indian Industry (CII), Thoothukudi Zone, said the proposed shipyard is likely to accelerate the industrial growth of Thoothukudi in the coming years. He said the project should be seen along with other major projects coming up in the region, including the spaceport at Kulasekarapattinam, as these projects could together create a wider industrial and technology ecosystem in southern Tamil Nadu.

Mr. Purohit said the competitive advantage as a shipbuilding destination comes from a combination of scale, strategic location, Thoothukudi’s ability to be an all-weather port, its existing port capabilities and the ability to design a modern shipbuilding ecosystem from the ground up. He added that the proposed development would be located next to a functioning all-weather port in the southern part of India, close to major international shipping routes and with access to deep coastal waters.

He further said that the wider industrial strength of Tamil Nadu could also complement the project. The state has an established engineering and manufacturing base, road, rail and air connectivity to the district and a large technical workforce. These factors could help the shipyard move beyond being an isolated manufacturing plant and becoming part of a large supply chain.

A helping hand: There were concerns about the extent of saline land falling within the project area and the potential impact on the livelihoods of salt workers and fishermen. The government has drawn up a compensation and rehabilitation package. | Photo credit: N. RAJESH

The real economic impact of the proposed project will not be measured only by the number of ships built in the shipyard. It will also depend on how many ancillary industries, engineering companies, logistics firms and other service providers spring up around it. For Thoothukudi, this could create a new layer of industrial activity around the existing port-led economy. CII’s Mr. Samuel agreed. He added that the district already has a strong industrial base in sectors such as automobile manufacturing. He emphasized that the proposed shipyard, along with other emerging investments, could therefore add a further industrial dimension to the district through increased job opportunities and property development. The project also fits into the Centre’s broader vision of strengthening India’s domestic shipbuilding capacity.

The proposed shipyard could transform the port city, traditionally associated with pearls, salt, fishing and thermal power, into a major maritime manufacturing destination.

A senior official of Guidance Tamil Nadu said that if the project is implemented as envisioned, it can change the face of not only Thoothukudi but also the southern districts. This would be similar to the development of the automotive manufacturing ecosystem around Sriperumbudur after the entry of Hyundai.

Mr. Purohit clarified that the shipyard is the anchor of the vision, but not the whole vision. The aim is to develop Thoothukudi as an integrated marine manufacturing cluster.

The road from Ulsan to Thoothukudi need not be measured by comparison between acres or investment figures. Its possible impact will also be measured by whether the proposed shipyard can create an industrial ecosystem capable of transforming the economic geography of the state.