Shein’s comeback in India is contingent upon adherence to strict licensing requirements.

Published: June 26, 2023
Author: Fashion Value Chain

-By Ankita Dutta.

Chinese online fast-fashion giant Shein has reportedly obtained approvals to re-enter the Indian market through a licensing deal with Reliance Industries Ltd. The partnership will allow Shein to tap into India’s consumer demand and increase local production, aligning with India’s goal of becoming a manufacturing hub. No official comments have been made by either company regarding the deal.

According to insiders, Chinese-founded online fast-fashion giant Shein has received approvals to re-enter the Indian market after agreeing to a rigorous licensing deal with Reliance Industries Ltd., led by Mukesh Ambani.

The agreement, finalized three years after Shein was banned in India, will require Reliance’s retail arm to have full ownership of the domestic business. Shein, headquartered in Singapore, will provide support and training to over 25,000 small and mid-sized local suppliers to produce Shein-branded products globally. The details were disclosed by anonymous sources.

This partnership structure will enable Shein to tap into the growing consumer demand in India and benefit from sales revenue. Additionally, it will allow the company to increase the proportion of goods manufactured in India that are sold on its platform. If Indian

manufacturers can fulfill one-fourth of Shein’s global demand, it could potentially contribute around 500 billion rupees ($6.1 billion) in exports from India. However, representatives from Shein and Reliance declined to comment on the matter.

Shein was among several Chinese apps that were banned in India in 2020 following deadly clashes between soldiers from both countries along their disputed Himalayan border. Since then, Shein has attempted to distance itself from its Chinese roots by relocating its headquarters to Singapore in 2021. To address data security concerns raised by the Indian government, all data generated by Shein’s app and operations in India will be stored within the country and inaccessible to the online retailer.

The licensing arrangement with Shein does not involve equity. Instead, Shein will receive a license fee from the Indian entity, with payments dependent on the profits made by that entity.

This deal demonstrates how India aims to maintain a cautious approach towards Shein while utilizing its expertise to bolster domestic manufacturing capabilities. Prime Minister Narendra Modi seeks to establish India as an alternative manufacturing hub, reducing reliance on China in global supply chains. India has set a target to more than double its annual exports to $2 trillion by the end of the decade.

For Shein, expanding its presence in India is part of its broader strategy to diversify manufacturing sources. The company has been proactive in strengthening local production capacities in other countries, ranging from Brazil to Turkey.

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