What:  Shein is going around Indian regulation by making a deal with Reliance, which in turns earns the capability to both supply Shein worldwide and sell the products in India

Why it is important:  In spite of some protests against Shein, it seems that its growth cycle is not over yet.

Reliance Industries, India's largest company, is partnering with Chinese retailer Shein in an attempt to dominate India's $10 billion online domestic fashion market. This partnership comes three years after Shein was banned in India as part of a broader crackdown on Chinese companies following border clashes between the two countries.

Under the recently approved license agreement, Shein will receive a percentage of profits from its fast fashion sales in India, while Reliance will assist Shein in establishing a supply chain within India's garment industry for global exports12. The partnership could also enable Shein to shift about 25% of its sourcing to India, a significant move given that Shein currently sources 93% of its products from China.

The Shein partnership will allow Reliance to cater to younger consumers at lower price points, which is important given that many online shoppers in India are young adults from smaller cities. On the other hand, Shein is expected to benefit from access to India's online market, which is the world's third largest e-commerce market and worth an estimated $50 billion in 20221. This move comes as Shein's expansion in Europe and the US begins to slow, and the company expects its gross merchandise value to almost triple by 2025 to $80.6 billion.

In the fashion ecommerce space, Reliance lags behind Myntra, a company that merged with Walmart-backed Flipkart in 2014 and accounts for around half of the online fashion market in India. Reliance's ecommerce fashion business Ajio holds about 4% of the market share.

Reliance seeks retail dominance in India with deal for Shein