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Chinese online fast fashion brand Shein is making a comeback in the Indian market after a ban of nearly three years. Shein, which was among the 59 apps banned by the Indian government due to concerns about national security, has partnered with Reliance Retail, the country's leading retailer, according to industry sources.
The restriction on Shein and other apps was made in June 2020 as tensions with China on the Himalayan borders increased. The matter was brought before the Delhi High Court, although Shein items were still offered through online retailers like Amazon. By working with Reliance Retail, Shein is now attempting to enter one of the global fashion markets with the quickest pace of growth.
Under the agreement, Shein will utilise Reliance Retail's sourcing capabilities, warehousing, and logistics infrastructure, as well as its vast portfolio of online and offline stores. The partnership will benefit Shein's global operations and provide opportunities for Reliance Retail, which boasts a wide range of fashion brands.
The government officials clarified that Shein's partnership with Reliance Retail Ventures Ltd would not require foreign direct investment (FDI) approval since Shein will not hold equity in the new operations. A wholly-owned subsidiary of Reliance Retail will be in charge of the platform.
However, if Shein decides to invest in India in the future, it would require clearance under press note 3 of the FDI policy.
Addressing data security concerns, officials stated that the platform and servers would be localised within India, ensuring that customer data remains within the country and complies with applicable Indian laws.
While 93% of Shein's sourcing currently comes from China, the partnership with Reliance Retail could shift 25% of sourcing to India, creating a potential export opportunity worth approximately â‚ą50,000 crores. This development comes when India's textile exports face challenges due to a demand slowdown in Western countries.
The government remains vigilant regarding Chinese companies attempting to bypass investment approval requirements by partnering with Indian shell firms. The Chinese automobile manufacturers with suspected Indian proxy partners, particularly in the electric vehicle market, are monitored closely by the Department for Promotion of Industry and Internal Trade.
The Shein-Reliance Retail partnership holds significant potential for the Indian fashion industry, offering growth opportunities and potentially boosting textile exports. As Shein re-enters the Indian market with Reliance Retail's support, it is poised to capitalise on the country's burgeoning fashion landscape and cater to the evolving needs of Indian consumers.
— Kritika Singhal
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