India’s Trade Secrets Bill: What Startups Must Know Now

On a humid June evening in a small industrial suburb outside Pune, a three-person startup celebrated the completion of a prototype that promised to make water purification cheaper and faster. They had spent two years, their savings, and a sleepless succession of nights refining a chemical process that, if kept secret, could have made them an attractive acquisition target or the foundation for a globally competitive business. Within six months, a competitor launched a strikingly similar product. The startup discovered, to its horror, that a departing engineer had carried blueprints, a spreadsheet of formulations, and a handful of private messages to a rival. The company’s legal remedy, at the time, was to point to a non-disclosure agreement and hope for a costly and uncertain civil suit under breach of contract law. That wrenching story—common in intent, if not in detail—captures why India’s recent move to consider a dedicated trade secrets law matters far beyond boardrooms or courtrooms. It is an inflection point for innovation, investment, and the practical reality of protecting ideas that will never be patented but are nonetheless vital to business value. 

India’s legal architecture for protecting confidential business information has long been piecemeal. Trade secrets have lived in the shadows of stronger, more familiar intellectual property regimes—patents for inventions, copyrights for creative works, trademarks for brands—relying largely on contractual arrangements, tort-based doctrines, and ad hoc remedies. That scattershot approach has suited certain contexts but left others exposed. In early October 2025 the government signalled a clear intention to change that: officials confirmed consultations on a Trade Secrets Bill aimed at creating a statutory framework for protecting unpatented inventions and business know-how, following a 2024 Law Commission report that explicitly recommended a sui generis statute. The Economic Times captured the policy moment when it reported the government’s consultations and the broader rationale—that a standalone law would plug a “big IP gap” and improve investor confidence. The Law Commission’s report, issued in March 2024, had already traced the contours of a draft Protection of Trade Secrets Bill, recommending definitional clarity, civil remedies, and mechanisms to balance public interest and whistleblower protections. The question now is not whether India needs a trade secrets law—many believe it does—but how that law should be written so it protects innovation without locking away information that matters to public safety, competition, or the right to know. 

At its core, a trade secret is simple to describe yet stubbornly difficult to legislate: it is information that derives commercial value from being secret and which the owner takes reasonable steps to keep confidential. That vagueness is intentional because trade secrets can be anything from a recipe, an algorithm, a customer list, a manufacturing process, to a formula for a dye. Their strength lies in duration: unlike patents, which require disclosure and expire after a set period, trade secrets can, in principle, endure indefinitely—so long as secrecy is preserved. This quality is a double-edged sword. On one hand, indefinite protection can be an engine of competitive advantage and long-term investment; on the other, it can be misused to hide terms of public interest or to obstruct healthy market competition. 

How other jurisdictions have tackled this dilemma offers useful guideposts. The United States, after years of patchwork state laws, enacted the Defend Trade Secrets Act (DTSA) in 2016, which provides a federal civil cause of action and a limited remedy of ex parte seizure in exigent circumstances, enabling owners to bring claims in federal court. The European Union adopted the Trade Secrets Directive, which harmonizes member states’ laws and emphasizes proportional remedies, safeguards for whistleblowers, and exceptions in the public interest. China’s regime allows for civil, administrative, and criminal remedies and sets financial thresholds for criminal prosecution—an aggressive posture that has both protected owners and raised concerns among foreign investors about enforcement and fairness. If India now joins the ranks of countries with a dedicated trade secrets law, lawmakers will have to choose a path that navigates these trade-offs: strong, predictable protection to attract investment and spur R&D on the one hand; sensible exceptions, transparency, and safeguards on the other. 

But a well-designed trade secrets law must not be merely protectionist. It should incorporate safeguards against misuse. The Law Commission’s draft, for example, envisaged whistle-blower protections to prevent the silencing of employees who disclose wrongdoing in the public interest—a critical check that prevents trade secret law from becoming a tool for concealing illegal conduct. Equally important are judicial safeguards against overbroad injunctions that freeze an alleged infringer’s operations without a meaningful opportunity to be heard. The DTSA and the EU directives both emphasize procedural safeguards; India should adopt the same spirit rather than draft a statute that prioritizes speed over fairness. As Thomas Jefferson warned about erecting permanent monopolies on knowledge, “He who receives an idea from me, receives instruction himself without lessening mine.” That sentiment—balancing the rights of creators with the public’s wider interest in information—resonates where trade secrecy risks veering into secrecy for secrecy’s sake. 

Practical implications for businesses are immediate and concrete. First, corporate governance must evolve: companies should treat trade secret protection not as an afterthought but as a core compliance pillar. That means clear classification of confidential information, robust access controls, employee training, and precise contracting—well-drafted NDAs, employment agreements with clear confidentiality and assignment provisions, and exit protocols that secure devices and materials. Second, technical safeguards matter. In a world where intellectual property often lives in code and cloud storage, cyber hygiene—encryption, privileged access management, logging, and incident response—becomes part of the trade secret definition. The signal to courts and regulators that an owner took “reasonable steps” to maintain secrecy often hinges on demonstrable technical measures. Third, dispute readiness is essential. Companies should adopt playbooks for rapid action: forensic preservation of evidence, escalation to senior counsel, and a calibrated public relations strategy to manage reputational risk. 

Yet, sound policy must also reckon with the costs and potential unintended consequences. For one, stronger trade secret protection could raise barriers to employee mobility. India’s tech sector thrives on talent circulation; niqab-style contractual restraints that freeze employees in place would be counterproductive. A statute must therefore be careful not to enshrine non-compete norms that stifle careers and entrepreneurship. Instead, it should focus on misappropriation of information, not on preventing people from working in their chosen fields. Second, enforcement risks being lopsided if courts lean toward injunctions that harm downstream users or consumers. Imagine a generic drug manufacturer barred from producing a life-saving treatment because of an old supplier’s confidential process; the public cost would be intolerable. For this reason, the statute must include public interest exceptions and mechanisms for compelled licensing in emergencies—limited, transparent, and tightly circumscribed—so that trade secrecy does not trump public health or safety. 

There is also an international dimension to weigh. Trade secrets law can influence foreign direct investment and technology transfers. Multinationals often worry about the strength of legal protections in host countries. If India’s law is clear, balanced, and enforceable, it could serve as a magnet for R&D centers and advanced manufacturing. Conversely, an opaque or overreaching law could scare away partners and chill collaboration. Policymakers must therefore consult widely, not just with large corporations but with startups, labour representatives, academic institutions, and civil society. The goal should be a law that is predictable, proportionate, and aligned with international norms so that it supports, rather than undermines, India’s global trade and innovation goals. 

From a litigation standpoint, courts will likely face an initial wave of test cases that shape the contours of the statute. Judges will have to grapple with doctrinal questions: what measures suffice to keep information secret; how to calculate damages for misappropriation; when to grant ex parte relief; and how to protect trade secret evidence during litigation without compromising confidentiality. India’s commercial courts, with their experience in speedy disposal of disputes, could be the natural forum for these claims, but their procedures may need calibration to handle the sensitive evidentiary demands of trade secret cases—sealed filings, in-camera hearings, and strict confidentiality orders. 

For compliance officers and in-house counsel, the coming law will demand action now, not later. Even before a statute is enacted, businesses should conduct trade secret audits: identify crown-jewel information, map who accesses it, document protective measures, and ensure contractual protections are up to date. Policy changes at the organizational level should include exit interviews, revocation of access on termination, and rigorous vendor management—many breaches occur not through employees alone but through third parties and contractors. A proactive posture reduces the risk of misappropriation and strengthens a company’s hand should it have to litigate. 

There are legitimate counterarguments to consider. Some critics warn that a trade secrets law may privilege established firms who can afford legal battles and thereby entrench incumbency. Others worry about the chilling effect on academic collaboration and the free flow of ideas between universities and industry. These are not trivial concerns. The antidote is specificity and balance. A well-crafted statute can differentiate between commercial secrecy and academic discourse, protect whistleblowing tied to public interest, and ensure that remedies do not become instruments of coercion. 

In practical terms, a few design principles would knit together protection and public interest. First, the definition of trade secret should be tight: information must be secret, have commercial value from being secret, and be subject to reasonable protective measures. Second, the statute should offer a mix of remedies—injunctions, damages, and account of profits—while limiting draconian remedies like blanket seizures to exceptional circumstances with judicial oversight. Third, there must be explicit protections for whistleblowers and for disclosures necessary to report illegal activity or to uphold public safety. Fourth, the law should allow courts to order compulsory licences in narrowly defined emergencies, with clear standards for necessity, remuneration, and judicial review. Finally, procedural rules must safeguard confidentiality during litigation through sealed records and restricted access, without turning justice into a private, inaccessible process. 

The debate about trade secrets is, ultimately, a debate about what kind of innovation policy India wants. Do we want a system that encourages disclosure for wider social benefit—patents, publications, open standards—or one that recognises and rewards secrecy as a legitimate form of commercial value? The right answer is not either/or but both-and: a flexible legal ecosystem that recognizes multiple routes to protect and commercialise knowledge. For a country aspiring to be a global manufacturing and innovation hub, the ability to offer robust, fair protection for knowledge that cannot or will not be patented is crucial. 

As legislators refine the draft and stakeholders line up to offer inputs, they would do well to remember that law is not a panacea; it is a framework that must be supported by business practices, technical safeguards, and a culture of compliance. The promise of a trade secrets law is not that it will stop every misappropriation—no law can guarantee that—but that it will lower risk, reduce uncertainty, and encourage investment and entrepreneurship. If India gets the balance right, the law could turn the painful tale of that Pune startup into a cautionary tale no longer; entrepreneurs could invest in original ideas with the assurance that the law recognizes and protects the quiet, proprietary work that powers innovation. 

This is also a moment for a broader public conversation. Trade secrets law touches on employment, health, competition, and democratic values. It raises questions about secrecy and transparency that need airing beyond closed consultation rooms. In that sense, a law that is crafted transparently, with broad consultation and explicit public interest safeguards, will be more legitimate and effective. Policymakers should strive for a statute that elevates protection without sheltering wrongdoing, that rewards innovation without entrenching incumbents, and that protects privacy and public safety in equal measure. 

When the draft becomes a bill—and eventually a law—its success will depend less on the force of legal prose and more on the willingness of courts, businesses, and regulators to apply it with nuance and fairness. For now, India has an opportunity: to design a trade secrets regime that reflects its economic ambitions and democratic commitments. The stakes are high—startups, multinational investors, academic researchers, and consumers all have a stake in how knowledge is protected and shared. Careful lawmaking can ensure that secrets are not a shadow economy of risk but part of a vibrant ecosystem where ideas thrive, markets compete fairly, and public interest is never an afterthought. If that balance can be struck, India’s next wave of innovation may no longer be stifled by secrecy on the one hand or by exposure on the other but propelled forward by a legal system that understands the true value of what lies quietly—yet powerfully—in the minds and labs of its creators.