India’s Draft Trade Secrets Bill: What It Would Change, and What to Do Before It Arrives

Patents, trade marks, copyright, designs, geographical indications and plant varieties each have their own Act in India. Trade secrets do not. The Law Commission called them the only form of intellectual property “that remains unaddressed by a specific statute”. A company’s formulas, source code, pricing models, customer data and manufacturing know-how are protected today through contracts, equity and the common law action for breach of confidence, a body of law built up case by case since John Richard Brady v. Chemical Process Equipments (Delhi High Court, 1987).

In March 2024 the 22nd Law Commission recommended a dedicated law and attached a draft, the Protection of Trade Secrets Bill, 2024, to its Report No. 289, Trade Secrets and Economic Espionage. The government has since consulted industry, and press reports say that opinion inside government is divided between a separate statute and amendments to the Indian Contract Act, 1872. No Bill has yet been introduced in Parliament. This note reads the draft as a practitioner would: what it would change for businesses, where it needs work, and what to do now.

The law today

Article 39 of the TRIPS Agreement obliges India to protect undisclosed information, but leaves the method to each country. India has relied on three tools:

• Contract. Non-disclosure agreements, confidentiality clauses in employment and supply contracts, and licences. They bind only the parties who signed them.
• Equity and breach of confidence. Courts restrain the use of confidential information imparted in circumstances that import a duty of confidence, even without a contract. This reaches recipients who knew, or ought to have known, that the information was confidential.
• Criminal and IT law. Theft, criminal breach of trust and cheating under the Bharatiya Nyaya Sanhita, 2023, and offences under the Information Technology Act, 2000 such as unauthorised access to computer systems. These help when a secret is taken, but do not protect the secret as such.

The system works, but it is uneven. Outcomes depend heavily on the facts of each case and the court hearing it, and businesses (and foreign investors in particular) cannot point to a single text that tells them what is protected and what the remedies are.

What the draft Bill says

A statutory definition

Clause 2(f) defines a trade secret as information that is (i) secret, in the sense that it is not generally known among, or readily accessible to, people in the circles that normally deal with that kind of information; (ii) commercially valuable because it is secret; (iii) the subject of reasonable steps by its holder to keep it secret; and (iv) information whose disclosure is likely to cause damage to the holder. The first three limbs follow Article 39.2 of TRIPS and the EU Trade Secrets Directive. The fourth does not, and it adds a hurdle: a claimant would have to show likely harm from disclosure, not only commercial value.

An Explanation excludes the experiences and skills an employee acquires in the course of normal professional practice, and any information disclosing a violation of law. As the Bill is printed in the report, the Explanation begins at item (II); its first item is missing. A final Bill will need to supply it.

Misappropriation, including by third parties

Clause 2(d) defines misappropriation in three ways: acquiring a secret without consent by unauthorised access or copying, or by any other conduct contrary to honest commercial practices; using or disclosing it in breach of a confidentiality or other duty; and acquiring, using or disclosing it when the person knew, or ought to have known, that it came from someone acting unlawfully. That last limb matters most in practice. It makes a competitor that hires a rival’s engineer, or buys a rival’s data from a vendor, answerable if it should have known where the information came from.

What is lawful

Clause 4 confirms that a trade secret may be acquired by independent discovery or creation, and by observing, studying, reverse engineering, disassembling or testing a product that is publicly available or lawfully held, unless the acquirer is under a duty not to do so. Clause 5 adds that acquisition, use or disclosure is not misappropriation when done to expose an unlawful act or misconduct, or in good faith to protect the public interest.

Remedies, in the Commercial Courts

Suits would go to the Commercial Courts and the Commercial Divisions of High Courts (clauses 2(a) and 8). Clause 8(2) would let a holder sue where it resides or carries on business, as the Copyright and Trade Marks Acts already allow. Under clause 7 the court may grant an injunction, including an ex parte one; at the claimant’s option, damages or an account of profits; surrender or destruction of documents and files containing the secret; and the recall, withdrawal or destruction of goods whose conception, features, functionality, manufacture or marketing is substantially based on a misappropriated secret. Interim orders may cover discovery, preservation of evidence and restraints on dealing with assets.

Clause 9 requires courts to preserve the secrecy of the subject matter during proceedings, and the report suggests confidentiality clubs for the purpose. Clause 10 lets anyone threatened with groundless proceedings sue for a declaration, an injunction and damages, as the other IP statutes already provide. Clause 13 keeps the existing equitable action for breach of confidence alive alongside the Act.

Compulsory licences

Clause 6 is the most unusual provision. In a national emergency or extreme urgency involving substantial public interest, including public health emergencies and national security, the Central Government could require a holder to license its trade secret to third parties or to the government, for a fee reflecting the secret’s value and the cost of developing it. Licensees must keep the information confidential, and the licence may be ended when the emergency passes. Neither the US Defend Trade Secrets Act nor the EU Directive contains anything comparable.

Five things the draft deliberately leaves out

• No registration. The Commission rejected a trade secrets registry or board: a register of secrets would be a target, and requiring registration would undermine secrecy itself.
• No criminal offences. The Bill is civil only. Criminal conduct stays under the Bharatiya Nyaya Sanhita and the IT Act.
• No economic espionage. Theft by or for a foreign State raises national security questions, and the Commission recommended a separate law for it.
• No “inevitable disclosure”. The Commission rejected the US doctrine that lets an employer stop a departing employee from joining a competitor on the theory that they cannot help using what they know. An Indian employer must show that something concrete was taken or is being used.
• No change to section 27. Post-employment restraints remain void under section 27 of the Contract Act, as the Supreme Court held in Percept D’Mark v. Zaheer Khan (2006). See our note on non-compete clauses in India.

Where the draft needs work

The fourth limb of the definition. Requiring proof that disclosure is “likely to cause damage” goes beyond TRIPS and could exclude valuable information whose harm is hard to show in advance, such as negative know-how (what does not work) or early-stage research. We would delete it, or move the question of harm to the remedies stage.

No limitation clause. The Commission recommended three years from misappropriation or from when the holder knew, or could reasonably have known, of it. The draft Bill does not say so. Without a clause, the residuary rule of three years from when the right to sue accrues (Article 113 of the Limitation Act, 1963) would apply, and misappropriation is often discovered long after it happens. The discovery rule should be written into the Act.

The public interest exception. Protecting genuine whistleblowers is right. But “in good faith to protect public interest”, with no requirement to disclose to an appropriate authority, is wide enough to be argued by anyone who leaks. The EU Directive ties the defence to revealing misconduct or illegal activity for the purpose of protecting the general public. A tighter test would protect whistleblowers without inviting abuse.

Compulsory licensing. Unlike a patent, a trade secret is lost forever once it leaks. Any compulsory licence should come with statutory confidentiality orders, penalties for onward disclosure by licensees, and a right of appeal on the fee. The rules under clause 12 will matter as much as the clause itself.

Contract law is not enough. Some in government reportedly favour amending the Contract Act instead. In our view that would not solve the core problem: contracts bind only the parties to them, and the most damaging misappropriation is by strangers to the contract, such as competitors, hackers and downstream buyers. A statute with a clear third-party liability rule, like clause 2(d)(iii), does.

What to do now

Whatever form the law finally takes, the evidence that wins trade secret cases is the same: proof that the information was valuable, that it was identified, and that you took reasonable steps to protect it. Most businesses can do this without waiting for Parliament.

1. Find and list your secrets. Keep a confidential register of what is secret (formulas, code, processes, pricing, customer analytics) and who owns each item. Courts will not protect information you cannot describe.
2. Control access. Limit each secret to the people who need it, log access, mark documents as confidential, and switch off access on the day someone leaves.
3. Write better NDAs. Define confidential information precisely, carve out the public domain, and add return-and-delete obligations and audit rights. Vague, catch-all clauses are hard to enforce.
4. Manage people carefully. Use confidentiality obligations rather than non-competes, hold exit interviews, take written confirmations that material has been returned, and remind leavers in writing of their continuing duties.
5. Keep new hires clean. Have joiners confirm that they bring no confidential material from former employers. Under the draft Bill, a business that ought to have known it was receiving another’s secret would be liable.
6. Prepare to act fast. Agree in advance who decides, how evidence is preserved, and when to seek an urgent injunction. In trade secret cases, days matter.
7. Choose between patent and secret deliberately. A patent gives a 20-year monopoly in return for disclosure; a secret can last indefinitely but offers no protection against independent discovery or reverse engineering. Decide product by product.

Our view

A dedicated statute would give India what investors, startups and courts have been asking for: a clear definition, a clear list of remedies, and confidential procedures in specialist courts. The Law Commission’s draft is a good foundation, and its refusal to import inevitable disclosure or a registry is sound. It needs a discovery-based limitation period, a definition that stays close to TRIPS, a tighter public interest defence and stronger safeguards around compulsory licences. In the meantime, the businesses best placed under any future Act will be those already treating their know-how as an asset to be identified and protected.

We will update this note when a Bill is introduced. For advice on protecting or enforcing confidential information, see our trade secrets practice or contact the firm.

This article is for general information and states the law as at 14 October 2026. It is not legal advice. For advice on your situation, contact the firm. Published by BRB Legal.