The development has created uncertainty around HD Hyundai’s proposed $4-billion anchor shipyard at Thoothukudi, which is being developed under India’s broader shipbuilding push backed by a ₹69,725-crore Union Cabinet-approved package.

HD Korea Shipbuilding & Offshore Engineering (HD KSOE), the holding company of HD Hyundai Heavy Industries, signed a tripartite MoU on April 20, 2026, with the National Shipbuilding & Heavy Industries Park, Tamil Nadu, and other stakeholders to develop the Thoothukudi facility. The proposed yard is expected to have an annual capacity of 2.5 million gross tonnes (GT).

According to people familiar with the matter, the Andhra Pradesh government has offered land and waterfront at Kakinada Gateway Port for the project. The state’s delegation, led by IT and Industries Minister Nara Lokesh, also held discussions with HD KSOE during a visit to South Korea in July.

The reported lobbying has raised concerns among officials in New Delhi, who believe it would be inappropriate to persuade an investor that has already selected Thoothukudi to shift to another state. HD Hyundai is also unlikely to establish two greenfield shipyards in India, industry sources said, leaving the Korean company to weigh the incentives and strategic advantages offered by Kakinada against its commitments at Thoothukudi.   The Thoothukudi project has already progressed with completion of its Techno-Economic Feasibility Report, while the Detailed Project Report and depth feasibility studies are under preparation. The proposed greenfield shipbuilding cluster has also received in-principle approval from the National Shipbuilding Mission.

With both Andhra Pradesh and Tamil Nadu aggressively pursuing the investment, the final location of HD Hyundai’s much-anticipated Indian shipyard remains uncertain.