Shein’s Return to India Depends on Strict Local Data and Operational Control with Reliance

Shein, the popular Chinese fashion retailer, is making a carefully structured re-entry into the Indian market following its ban in mid-2020. The ban was imposed over concerns regarding national security, specifically relating to Chinese apps and their data practices. This re-entry, however, comes with stringent conditions imposed by the Indian government.

Reliance Retail Takes Full Control of Shein's Operations

In a significant move, Shein has been granted a rare exception to the ban, but with a crucial condition. As per a parliamentary disclosure by India’s Commerce Minister Piyush Goyal, Reliance Retail Ventures Limited will have full ownership and operational control of the Shein platform in India. Shein will function exclusively as a technology partner, with no control over the local operations.

Key Conditions of Shein's Return to India

The Indian government has set out a series of requirements for Shein’s re-entry, ensuring that the platform operates within India’s regulatory framework. These conditions include:

• Local Hosting: Shein will be hosted entirely on Indian infrastructure. This move ensures that the platform operates within the boundaries of Indian regulations.

• Data Sovereignty: One of the most critical conditions is data sovereignty. All Indian customer data, whether personal or non-personal, will remain within India. Shein will not have access to or any rights over this data, a safeguard to protect user privacy.

• Security Oversight: Shein will be subject to regular audits by government-empanelled cybersecurity auditors. This level of scrutiny is an uncommon but necessary step to address national security concerns associated with foreign apps.

Reliance's Role in Shein’s Indian Operations

Reliance Retail, a subsidiary of the conglomerate Reliance Industries, will oversee Shein’s local operations, ensuring compliance with Indian laws. This arrangement is in line with the Indian government’s focus on promoting economic self-reliance and increasing domestic production.

Under the deal, local manufacturers and suppliers will produce Shein-branded products, catering to both the domestic and international markets. This is expected to boost India’s textile industry, creating numerous employment opportunities and fostering economic growth.

Why Shein Was Banned in India

Shein was one of over 300 Chinese-linked apps banned in India starting in 2020, following escalating national security concerns. This group of apps, including ByteDance’s TikTok and Alibaba’s UC Browser, were accused of collecting and mishandling Indian user data. The Indian government’s actions came in the wake of heightened tensions with China, with the aim of protecting the nation’s cybersecurity.

China, however, has frequently criticized India’s ban on Chinese apps, claiming that the move violated World Trade Organization (WTO) rules and harmed the interests of Chinese companies.

Shein-Reliance Deal: A Precedent for Other Chinese Companies

The Shein-Reliance partnership could pave the way for other Chinese-linked companies seeking to re-enter the Indian market. By ensuring local operational control, data sovereignty, and government oversight, this agreement addresses India’s national security concerns while allowing for economic collaboration. It presents a new framework for how foreign companies can comply with Indian regulations and re-establish their presence in the country.

Conclusion

Shein’s return to India marks a significant shift in the country’s approach to dealing with foreign, Chinese-linked companies. With Reliance’s operational control and strict local data regulations, this arrangement aims to balance national security concerns with the benefits of economic growth and domestic manufacturing. The Shein-Reliance partnership could potentially set the stage for future collaborations between India and other international companies, ensuring both economic growth and data security.