India eyes a new trade secrets law: what’s at stake, who gains, and what could go wrong

If you build anything valuable—algorithms, pricing models, enzyme recipes, supplier lists—there’s always that one anxiety that won’t let you sleep: “What if this leaks?” In India today, your best protection is a patchwork of NDAs, contract clauses, and a silent prayer that your ex-employee’s new employer plays nice. That could soon change.

According to recent coverage, the government is exploring a dedicated trade secrets statute to plug the country’s biggest unaddressed IP gap. Stakeholder consultations are underway, and the idea is to create a clear definition, remedies for misappropriation, and guardrails that line up with how major economies handle this stuff.

Why now?

Three reasons.

1.  The hole in the fence is obvious. India has no standalone trade secrets law. Courts lean on contract law (Indian Contract Act, 1872), equity, and breach-of-confidence principles. It works—until it doesn’t—especially when subcontractors or former employees are involved.

2.  The Law Commission already did the homework. In March 2024, the 22nd Law Commission recommended a Protection of Trade Secrets Bill, 2024, laying out a modern framework consistent with TRIPS, and flagging public-interest exceptions like whistleblowing and government use. That report means the scaffolding exists; it just needs political will.

3.  Global competitiveness. From the US (DTSA) to the EU (Trade Secrets Directive), dedicated regimes are the norm. India risks being the outlier where high-value know-how feels legally “squishy.” Multiple practitioner notes through 2024–25 make the same point: codification would raise certainty for investors and operators.

What might the Indian law include?

While the government hasn’t published a final draft, the Law Commission’s model and subsequent expert analyses hint at likely contours:

·    Definition that maps to TRIPS: information that isn’t generally known, has commercial value, and is subject to reasonable secrecy measures. That clarity alone helps founders decide what to patent (disclose) vs. what to keep as a secret (don’t disclose).

·    Rights of the holder: to use, disclose, and license the secret, pursue civil remedies for misappropriation, and contract to restrict access—basically, the rights your NDAs try to simulate, but with statutory teeth.

·    Where to fight: channel disputes into Commercial Courts for speed and consistent handling—important when “time to injunction” can make or break a business.

·    Defences and exceptions: expect carve-outs for independent discovery, reverse engineering, whistleblowing, public interest, and government use (e.g., emergencies). Some commentaries even discuss compulsory licensing of secrets in narrow, high-public-interest scenarios—controversial, but not unprecedented in Indian IP policy.

·    Remedies that actually bite: injunctions, delivery-up or deletion, damages, and possibly ex parte measures to freeze the bleed. This aligns with how India already treats urgent IP disputes.

Who benefits the most?

·    Deep-tech and pharma/biotech firms that live on process know-how (not just patents). If your competitive edge is a fermentation step or a tuning recipe, you want predictable relief if it leaks.

·    SaaS and AI startups with proprietary models, feature roadmaps, or data curation pipelines that don’t cleanly fit patents. A statutory regime can deter casual poaching and speed up injunctions. (Inference based on proposed bill contours and India’s startup profile.)

·    Manufacturing and supply-chain operators with pricing algorithms, vendor terms, and BOMs that are hard to patent but easy to steal.

The hard questions we shouldn’t ignore

Let’s not pretend a shiny new law magically fixes messy realities.

1.  Compulsory licensing & public interest: If the final law borrows language allowing compulsory access in emergencies (health, national security), industry will demand surgical drafting. Get it wrong and you spook investors; get it right and you preserve trust without killing innovation.

2.  Employee mobility: India’s tech engine runs on job-hopping. Over-broad “secret” claims can chill careers. The law must balance legitimate confidentiality with the right to use general skills and experience. Courts worldwide struggle here; India will too. (Comparative context; see Law Commission’s TRIPS-aligned approach.)

3.  Reverse engineering: Perfectly legal under most regimes if you didn’t cheat to get the product. The statute needs to say this cleanly; otherwise we’ll have innovation-killing ambiguity.

4.  Startups vs. big buyers: Many Indian startups hand over architecture docs to win enterprise deals. A statute helps, but operational hygiene still rules: access logs, clean room practices, “need-to-know” sharing, and vendor governance. (Practice guidance reflects this emphasis.)

What to do today (before the law lands)

·    Classify your crown jewels. If you can’t list your trade secrets in plain English, you can’t protect them. Tag owners, access levels, and why each item is secret. (Best practice synthesized from practitioner guides.)

·    Upgrade contracts and processes. Modern NDAs with audit rights, strong IP clauses in employment and vendor agreements, and exit checklists for departing staff.

·    Prove “reasonable measures.” Access controls, DLP, encryption, clean desks, and documented training. Courts everywhere ask: “Did you treat it like a secret?” Have receipts.

·    Decide patent vs. secret. If your edge can be discovered via public product use, patents might be safer. If it’s a process no one sees, a trade secret can be smarter. The coming statute will raise the odds that choice actually pays off.

The bottom line

India’s push for a dedicated trade secrets law is overdue and welcome. The direction of travel is clear—from common-law patchwork to a statute with modern definitions, focused forums, and balanced exceptions. The only open question is execution: whether the final text protects builders without smothering talent mobility and legitimate reverse engineering. Get that balance right, and you’ll see more founders choosing to build—and keep building—here.