Image: World Economic Forum 2007
Shein-Reliance Sourcing Deal Faces Setback Amid US-China Trade Tensions
The ambitious partnership between Chinese fast-fashion giant Shein and Reliance Retail to establish India as a major global sourcing hub is facing serious headwinds due to rising trade tensions between the United States and China. The deal, which was expected to integrate thousands of Indian micro, small, and medium enterprises (MSMEs) into Shein’s global supply chain, is now under review.
A key objective of the Shein-Reliance collaboration was to ramp up apparel production in India not only for the domestic market but also for international exports. The initiative had projected engagement with over 25,000 Indian MSMEs to supply fashion products for the Shein platform, aligning with India’s push for self-reliant manufacturing.
However, the recent decision by the U.S. to impose a 145% tariff on Chinese-made goods has prompted a strategic response from Beijing. Concerned about potential manufacturing migration to countries like India, Chinese authorities are reportedly advising companies like Shein to avoid moving production abroad, especially to markets that are aligning more closely with Western trade blocs.
This has cast uncertainty over Shein’s plans to scale its sourcing operations in India. The partnership had also marked Shein’s re-entry into the Indian market—after being banned in 2020 over data privacy concerns—through a platform managed by Reliance Retail.
If Beijing’s stance hardens further, it could shrink the scope of the India-based supply chain, limiting the volume of exports and dampening the potential economic boost expected for Indian MSMEs. The final outcome of this collaboration now appears to hinge on how the global trade environment evolves and whether Shein can balance compliance with Chinese directives while expanding its international footprint through Indian partnerships.
