India’s Push for a Trade Secret Law: Towards Certainty, Protection, and Global Alignment

Introduction

Trade secrets are the invisible assets that drive innovation and sustain competitiveness in a knowledge economy. From algorithms and customer databases to manufacturing processes and research data, confidential business information often holds more value than registered intellectual property. Yet, India despite its thriving technology and pharmaceutical sectors lacks a dedicated trade secret statute.

Recognising this vacuum, the 22nd Law Commission of India, in its 289th Report on “Trade Secrets and Economic Espionage” (March 2024), proposed a draft Protection of Trade Secrets Bill, 2024. The proposed framework seeks to provide a predictable legal regime for protecting confidential business information while balancing competing considerations of innovation, employee mobility, fair competition, and public interest disclosures.

The Present Legal Landscape: Fragmented and Contract-Based

Currently, India protects trade secrets through a patchwork of laws and equitable doctrines rather than a dedicated statute. Protection is derived primarily from:

• Contract Law: through non-disclosure agreements (NDAs), confidentiality clauses, and employment contracts.
• Equity: via the doctrine of breach of confidence.
• Tort Law: recognising misappropriation or unfair competition.
• Criminal Law: under the Bharatiya Nyaya Sanhita, 2023 (BNS) – specifically, provisions relating to criminal breach of trust (Sections 316–319), cheating (Sections 318–320), and dishonest misappropriation of property (Section 309) – which can apply when trade secrets are stolen or misused.
• Information Technology Act, 2000: which penalises unauthorised access, data theft, or disclosure of confidential information (Sections 66–72).

While these avenues offer partial remedies, they are piecemeal and reactive. There is no statutory definition of a “trade secret,” no uniform test for “reasonable measures,” and no cohesive enforcement mechanism creating uncertainty and inconsistent judicial outcomes.

The Proposed Protection of Trade Secrets Bill, 2024: Key Highlights

The draft Bill appended to the Law Commission’s report introduces India’s first sui generis trade secret regime.

1. Definition of Trade Secret

Information (technical or commercial) qualifies as a trade secret if it:

• is not generally known or readily accessible;
• has commercial value due to its secrecy; and
• is subject to reasonable measures to maintain confidentiality.
• This mirrors Article 39 of the TRIPS Agreement and the EU Trade Secrets Directive (2016/943).

2. Rights and Obligations of Holders

Trade secret holders are granted rights to use, disclose, or license information under confidentiality conditions, but must demonstrate that they have taken “reasonable measures” to preserve secrecy such as NDAs, encryption, access restrictions, or internal security policies.

3. Civil Remedies for Misappropriation

The Bill envisages civil remedies like injunctions, damages, and accounts of profits against anyone who unlawfully acquires, uses, or discloses trade secrets. Courts may grant ex parte injunctions in urgent cases, subject to safeguards.

4. Public Interest and Government Use

In exceptional cases such as national emergencies, public health, or national security, the government may authorise use of trade secrets, provided fair compensation is paid to the holder.

5. Whistleblower Protection

Disclosures made in good faith to expose illegality, corruption, or wrongdoing are protected, drawing inspiration from Section 1833(b) of the U.S. Defend Trade Secrets Act (DTSA, 2016).

Why India Needs a Trade Secret Law

1. Legal Certainty and Predictability: The absence of a clear statutory regime forces businesses to rely solely on contract law, which fails to address third-party misuse or cyber theft. A dedicated statute would offer clarity, consistent remedies, and enforceability.
2. Economic and Innovation Imperatives: India’s innovation-driven sectors like pharmaceuticals, defence technology, fintech, and AI depend on secure protection for confidential know-how. A codified regime would encourage R&D investment and strengthen investor confidence.
3. Alignment with International Standards: Jurisdictions such as the U.S. (DTSA, 2016), EU (Directive 2016/943), and China (2019 Anti-Unfair Competition Law) already have detailed trade secret laws. India’s adoption will harmonise domestic IP protection with global expectations, in line with its TRIPS obligations.
4. Protection Against Economic Espionage: The Law Commission highlighted growing risks of cyber espionage and data misappropriation, noting that India needs stronger deterrence mechanisms, particularly for cross-border digital trade and technology transfers.

Comparative Perspective

India’s approach borrows the definitional clarity of international models while tailoring flexibility for public-interest use by the government – a balance between innovation protection and sovereign needs.

Challenges and Legal Concerns

1. Employee Mobility and Non-Compete Risks: Overbroad definitions could chill employee movement or innovation. The law must expressly exclude knowledge or skills acquired through experience, and lawful reverse engineering.
2. Whistleblower and Public-Interest Safeguards: The current draft recognises whistleblowing but needs clearer statutory language protecting disclosures made to regulators, courts, or investigative authorities.
3. “Reasonable Measures” Standard: The term must be contextual – what is reasonable for a start-up cannot be equated with a multinational corporation’s capabilities. Tiered compliance standards could prevent disproportionate burdens.
4. Procedural Safeguards for Injunctions and Seizure: While quick relief is essential, judicial oversight and time-bound review must ensure due process. The U.S. DTSA’s strict criteria for ex parte seizures provide a useful precedent.
5. Overlap with Data Protection and Competition Law: Since trade secrets often include personal or market-sensitive data, coherence with the Digital Personal Data Protection Act, 2023 and the Competition Act, 2002 will be vital to avoid regulatory conflict.

Way Forward

India’s move toward a statutory trade secret framework is both timely and necessary. However, the final legislation must balance protection with flexibility. The following principles are critical:

• Narrow, functional definition to prevent overreach;
• Contextual compliance obligations based on enterprise size;
• Robust whistleblower immunity for disclosures in public interest;
• Procedural safeguards for injunctions and evidence seizures; and
• Awareness and judicial training to ensure consistent interpretation.

Conclusion

The proposed Protection of Trade Secrets Bill, 2024 represents a significant milestone in India’s intellectual property evolution. By offering legal certainty and harmonisation with international standards, it can attract foreign investment and promote innovation-driven growth.

However, the law’s strength will lie in its balance, protecting confidential business information without stifling competition, transparency, or mobility. If enacted with precision and foresight, the statute can finally fill one of India’s most enduring IP gaps and fortify the country’s position as a trusted innovation hub.