Shein, the Chinese-founded online fast-fashion giant, has reached an agreement with Reliance Industries Ltd., owned by Mukesh Ambani, to re-enter the Indian market. This agreement, occurring three years after Shein was banned in India, will require Reliance’s retail arm to have complete ownership of the domestic business. According to insider sources, Shein will provide production support and training to over 25,000 local suppliers in India, enabling them to produce Shein-branded products for global distribution.
The arrangement aims to capitalize on the growing consumer demand in India, the world’s most populous country, allowing Shein to benefit from sales and increase the share of Indian-made goods on its platform. If Indian manufacturers can meet one-fourth of Shein’s global demand, this could potentially add exports worth around 500 billion rupees ($6.1 billion) from India.
Following deadly clashes between Indian and Chinese soldiers along the disputed Himalayan border, Shein fashion app was one of the Chinese apps banned by India in 2020. To distance itself from its home country, Shein relocated its headquarters to Singapore in 2021. As part of the agreement, all data generated by Shein’s app and its operations in India will be stored within India to address data security concerns raised by the Indian government.
The licensing deal ensures that Shein will be compensated through a license fee from the Indian entity. Payments will be made solely from the profits generated by the Indian business, as there is no equity involved in the agreement. This arrangement reflects India’s cautious approach to involving Shein while aiming to leverage its expertise to enhance India’s own manufacturing capabilities. Prime Minister Narendra Modi is focused on establishing India as an alternative manufacturing hub and aims to more than double the country’s annual exports to $2 trillion by the end of the decade.
Expanding its presence in India aligns with Shein’s broader strategy to diversify its manufacturing sources. In addition to India, the company has been bolstering local production in various countries, including Brazil and Turkey.
