China Tariffs May Impact Shein-Reliance Deal, Global Sourcing from India at Risk

The Shein-Reliance Retail partnership could face a major setback, as the Chinese fast fashion giant is reportedly reconsidering its global sourcing plans from India. This development comes in the wake of rising tensions between China and the US, which have led to Beijing discouraging domestic companies from moving manufacturing overseas.

Shein may scale down the Reliance Retail partnership

According to sources familiar with the matter, Shein is in talks to renegotiate its sourcing agreement with Reliance Retail, India’s leading retail player. The deal initially aimed to make India a key sourcing hub for Shein’s global operations, supporting both companies’ ambitions to tap into international markets.

The global sourcing arrangement may be scaled down significantly, insiders said, pointing to increased policy pressure from the Chinese government.

Tariff war with the US triggers policy changes in China

The sudden shift is linked to China’s reaction to heightened tariffs from the US, which is prompting Beijing to tighten control over local manufacturers. As a result, companies like Shein are being discouraged from shifting production bases outside China, including partnerships that would increase manufacturing in India.

Beijing’s move is seen as a strategic response to protect its industrial base amid ongoing tariff pressures from the US.

Implications for India’s retail ambitions

The Shein-Reliance collaboration was expected to boost India’s role in global fashion exports, while also providing a competitive edge to Reliance in the fast-fashion segment. A potential rollback of sourcing plans could limit India’s expected gains and disrupt the growth momentum for both partners.

While discussions are still ongoing, sources believe that the scope of the partnership may be limited going forward, unless there is a policy change from the Chinese side or easing of tariff tensions globally.