Shein is about to return to India in a big way

Little details were made public on Friday. But in recent days, the Wall Street Journal and Financial Times reported that the two companies had struck a licensing deal that was subsequently approved by the government, allowing Shein to revive its presence in India.

According to the FT, which cited unidentified sources, the partnership will give Shein a share of profits from future sales through Reliance, while Ambani’s empire will help Shein ramp up its manufacturing in India for export markets.

“We can confirm Shein’s partnership with Reliance Retail and have no additional comment at this time,” a Shein spokesperson said. Reliance and India’s commerce ministry did not immediately respond to a request for comment.

Shein, an online retailer that competes with Zara and H&M (HNNMY), was banished from India in 2020 as the government banned dozens of Chinese apps in the wake of deadly border clashes that left at least 20 Indian soldiers dead.

At the time, Shein was headquartered in China. The company later moved to Singapore.

Shein crept back into the Indian market in 2021 through Amazon (AMZN), which included it as a seller for the Prime Day festival. The brand is still listed on the e-commerce giant’s Indian platform, where a small selection of apparel remains available.

A powerful partner

Its new partnership with Reliance Retail, which bills itself as the country’s largest retailer, could be a game-changer. Reliance has expanded aggressively in recent years, bringing in international brands such as 7-Eleven, Burberry, Muji and Pret-A-Manger.

One of the company’s malls also recently welcomed a prominent new anchor tenant: Apple (AAPL), which opened its first physical stores in India last month.

By teaming up with Shein, a seller of trendy goods that enjoys a cult following around the world, Reliance will be able to cater to younger consumers at lower price points.

That’s critical because many of the customers shopping online for the first time in India are young adults from “smaller cities,” according to Bain.

“They primarily purchase fashion as the first category online, and they typically start buying at entry price points,” the consultancy said in a report last year.

Shein, meanwhile, can use the partnership to tap into the world’s third largest e-commerce market, worth an estimated $50 billion in 2022. Fashion is a huge part of that, serving as one of the top drivers of growth, according to Bain.

Shein will also get to further diversify its sourcing, which has come under scrutiny from US lawmakers who have raised questions over whether the company is using forced labor in China.

This month, a bipartisan group of US legislators asked the US Securities and Exchange Commission to require Shein to certify that none of its products made in China involve the use of Uyghur forced labor. Washington has banned all imports from the Chinese region of Xinjiang over such concerns.

Shein has said it doesn’t have any suppliers in the Xinjiang region, and it has zero tolerance for forced labor.

— Sania Farooqui in New Delhi contributed to this report.

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