MUMBAI/BEIJING, April 18 – Chinese fast fashion giant Shein is renegotiating its sourcing partnership with India’s Reliance Retail and may scale down its plans to make India a global manufacturing hub, as Beijing pressures companies to retain production domestically amid rising U.S.-China trade tensions, sources familiar with the matter said.
The development comes after the U.S. imposed steep new tariffs, including a 145% duty on Chinese-made goods under the Donald Trump administration, triggering concerns in Beijing that manufacturers could shift production to countries with lower tariffs, including India.
“A core objective of the Reliance Retail-Shein partnership was to establish India as a manufacturing hub for Shein’s global operations,” said an executive involved in the negotiations. “But with the Chinese government dissuading manufacturers from relocating after the latest U.S. tariffs, the original arrangement is being revised.”
The original agreement between Shein and Reliance Retail, signed in 2023, included plans to integrate approximately 25,000 Indian micro, small, and medium enterprises (MSMEs) into Shein’s global supply chain and develop an export platform for Indian garment and textile producers. The partnership also involved a technology-sharing agreement to build an indigenous e-commerce platform hosted on Indian infrastructure, without Shein having access to local consumer data.
However, sources said those ambitions are now uncertain. The two companies are exploring alternative approaches to comply with China’s recent directives, which discourage firms from shifting manufacturing operations abroad.
Emails seeking comment from Reliance Retail and Shein remained unanswered as of press time.
Shein, currently headquartered in Singapore, derives most of its manufacturing output from China. The company, which returned to India this February via a Reliance-operated standalone app, was banned in the country in 2020 during a crackdown on Chinese apps over national security concerns.
While global firms such as Apple have diversified production into India, Chinese consumer electronics brands including Oppo, Vivo, and Realme continue to base their core manufacturing operations in China, despite producing devices for the Indian market.
Commerce Minister Piyush Goyal confirmed in January that Shein’s platform would remain indigenous and locally operated, with no data control or access by Shein. The platform was expected to bolster India’s $10 billion fast fashion market, which is projected to grow fivefold to $50 billion by 2030-31, according to Redseer Strategy Consultants. Despite facing a challenging global environment, Shein reported a 19% increase in sales to $38 billion in 2024, though its net profit declined by nearly 40% to $1 billion, according to media reports.
India’s fast fashion segment has shown resilience, growing 30-40% in FY24 despite broader retail consumption headwinds, the Redseer report noted. The future of the Shein-Reliance partnership now hinges on how the companies adapt to geopolitical and regulatory constraints, with stakeholders watching closely as India eyes a larger role in the global fashion supply chain.
