Chinese fast fashion giant Shein is rethinking its global sourcing partnership with Reliance Retail, possibly scaling it back, as Beijing urges domestic firms to avoid relocating production overseas in the wake of rising trade tensions with the US, the Economic Times (ET) has reported, citing people familiar with the matter.
The collaboration, announced in 2023, aimed to position India as a manufacturing base for Shein’s global supply chain. However, the plan is now under review following China’s push to retain domestic manufacturing after Washington raised tariffs on Chinese goods. The administration of former US President Donald Trump had imposed a hefty 145% tariff on Chinese products, sparking concerns in Beijing that manufacturers may shift operations to lower-tariff countries like India.
An executive aware of the ongoing talks told ET that the original arrangement between Shein and Reliance is being reassessed due to the evolving geopolitical scenario. “The partnership was conceived with the goal of building a global supply base out of India. That now hangs in the balance,” the person said. According to another source, both companies are exploring potential workarounds to comply with recent Chinese government advisories discouraging offshore manufacturing.
Shein, which made its return to India earlier this year via a standalone app operated by Reliance Retail Ventures, had previously been banned during a broader crackdown on Chinese apps in 2020 amid border tensions. Its re-entry was viewed as a strategic move not just for retail but also for enabling Indian micro, small, and medium enterprises (MSMEs) to tap into Shein’s global fashion supply chain. The plan included onboarding as many as 25,000 Indian MSMEs and sharing Shein’s manufacturing expertise and technology. However, the latest developments cast doubt on the extent of Shein’s sourcing commitments from India.
Despite Shein shifting its headquarters to Singapore, the company still relies heavily on Chinese manufacturing. While Western companies such as Apple are gradually moving production to India, Chinese electronics firms like Oppo and Vivo have yet to make similar global transitions despite manufacturing in India for the domestic market. The Shein-Reliance agreement was designed with strict data separation rules. Commerce Minister Piyush Goyal had clarified earlier this year that the app infrastructure is entirely Indian-owned, with no access or control granted to Shein over consumer data.
The backdrop to this development is Shein’s recent dip in profitability. International reports peg its net profit at $1 billion in 2024, down nearly 40% from the previous year, although revenues climbed 19% to $38 billion. Meanwhile, India’s fast fashion market is witnessing explosive growth. A report by Redseer Strategy Consultants estimates that the industry, currently worth around $10 billion, could quintuple to $50 billion by 2030-31. Fast fashion alone grew 30-40% in FY24, outpacing the broader fashion sector, which saw a modest 6% uptick.