Shein seen boosting Indian manufacturing amid U.S.-China trade war

Fast fashion giant Shein is reportedly set to boost its manufacturing in India with a view to bolstering its international supply chains amid the ongoing U.S.-China trade war.

The Chinese-founded, Singapore-headquartered brand and Indian partner Reliance Retail are set to expand their supplier base in the South Asian country and begin international sales of India-made Shein clothes within the next six to 12 months, Reuters reported Monday, citing sources.

The plans aim to increase Indian suppliers from 150 to 1,000 within a year, they added.

Shein told CNBC the partnership was limited to the licensing of its brand to Reliance Retail for Indian domestic consumption only. Reliance did not immediately respond to a request for comment.

According to the sources, discussions between the firms were underway ahead of fresh U.S. tariffs on China and the closure of the former’s ‘de minimis’ trade loophole.

Analysts nevertheless dubbed it a potentially savvy move given brewing trade tensions and increased scrutiny over Shein’s supply chains ahead of its closely watched initial public offering.

”Shein’s expansion of its production in India is on the face of it a shrewd move, given the trade headwinds facing the company,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, told CNBC via email.

“It does look like using India as a manufacturing base is a long-term plan and the current tariff challenges could speed this up,” Ed Sander, analyst at Tech Buzz China, added.

It returned to India in February, as part of a licensing deal with Reliance Industries, the conglomerate owned by Asia’s richest person, Mukesh Ambani. The partnership is one of many Reliance has with global clothing brands including Brooks Brothers, Marks & Spencer and Diesel.

Under the deal, Shein-branded clothes are produced domestically in India and sold on the SheinIndia.in website. This differs from most other Shein websites, which list products made in China. The firm nevertheless has existing manufacturing in Brazil and Turkey.

An official from Reliance Retail said at the time that Shein would use India as “supply source for its global operations,” according to the BBC. They added that the deal would simultaneously help Reliance in “building the network” and training Indian garment manufacturers as part of India’s wider plans to promote its textile and garments export industry.

“I doubt if the option of exporting elsewhere from India will be the main aim at the moment,” Sander said, noting current limitations around India’s factory capacity. “Having said that, this could change in the future if Reliance scales up.”

It comes as other companies have also been ramping up their production in India as they seek to avoid the most punitive tariffs on…