How to Draft an NDA in India: Clauses, Types and Enforceability

To draft an NDA in India, you define the confidential information precisely, name the parties and their permitted purpose, set obligations and exclusions, fix a confidentiality term, and add remedies and governing-law clauses — then sign it on stamp paper of the value prescribed by the relevant State Stamp Act. A well-drafted Non-Disclosure Agreement (NDA) is enforceable in India as an ordinary contract under the Indian Contract Act, 1872, provided its restrictions are reasonable and it does not operate as a general restraint of trade under Section 27. Learning how to draft an NDA in India is less about copying a template and more about matching each clause to a real commercial risk.

This guide explains the building blocks, the difference between mutual and one-way NDAs, the clauses that decide enforceability, and the practical mistakes that make Indian courts reluctant to grant relief. It is general information, not legal advice; have any agreement reviewed by an advocate before you sign.

What an NDA is and when you need one

An NDA — also called a confidentiality agreement or secrecy agreement — is a contract in which one or more parties agree not to disclose or misuse information shared for a defined purpose. Indian law has no separate “NDA statute”; an NDA is simply a contract governed by the Indian Contract Act, 1872. That means it must satisfy the ordinary requirements of Section 10: free consent, lawful consideration, competent parties, and a lawful object.

You typically need an NDA before:

• Sharing a business plan or financials with an investor or acquirer
• Engaging a contractor, freelancer, or vendor who will see internal data
• Hiring employees who access trade secrets, source code, or client lists
• Beginning a joint venture, technology transfer, or manufacturing tie-up
• Discussing a potential partnership where both sides reveal sensitive material

If the relationship is a paid services engagement, the confidentiality terms often sit inside a larger contract rather than a standalone NDA — see our guide on service agreement drafting for how those clauses interact.

Mutual vs one-way NDA: which to use

Choosing between mutual vs one-way is the first drafting decision, because it shapes every obligation that follows.

A one-way (unilateral) NDA protects information flowing in a single direction — one party discloses, the other only receives. Use it when only you are revealing sensitive material, for example pitching your product to a prospective distributor.

A mutual (bilateral) NDA binds both parties because each will disclose confidential information to the other. Use it for joint ventures, mergers, co-development, or any negotiation where both sides open their books.

Feature	One-way (unilateral) NDA	Mutual (bilateral) NDA
Who discloses	One party only	Both parties
Who is bound by secrecy	The receiving party	Both parties
Typical use	Investor pitch, vendor onboarding, hiring	Joint venture, M&A due diligence, co-development
Drafting complexity	Simpler, one set of obligations	Symmetrical obligations for each side
Negotiation friction	Lower	Higher (each side protects itself)
Risk if mislabelled	Discloser unprotected if reverse flow occurs	Over-broad burden on a party that shares little

A common error is signing a one-way NDA when information actually flows both ways. If the “receiving” party later shares its own data, that data is unprotected. When in doubt, a mutual NDA is safer.

Essential clauses of an NDA

Strong drafting comes down to getting the clauses right. The following are the core building blocks of an enforceable Indian NDA.

1. Parties and recitals

Identify each party by full legal name, entity type, and address. A short recital states the purpose — for example, “to evaluate a potential investment.” The purpose clause matters: it limits how the recipient may use the information.

2. Definition of “Confidential Information”

This is the heart of the NDA. Define what is protected — business plans, financial data, source code, customer lists, pricing, designs — and whether oral disclosures count (usually subject to written confirmation within a set number of days). A definition that is too vague invites disputes; one that is impossibly broad (“everything we ever tell you”) is harder to enforce.

3. Exclusions from confidentiality

Standard carve-outs prevent the NDA from being unreasonable. Information is usually not confidential if it:

• Was already public, or becomes public without breach
• Was lawfully known to the recipient before disclosure
• Is independently developed without using the disclosed information
• Is received lawfully from a third party with no duty of confidence
• Must be disclosed by law, court, or regulator (with prior notice where possible)

4. Obligations of the receiving party

State what the recipient must do: use the information only for the stated purpose, restrict access to a need-to-know basis, apply reasonable security, and not reverse-engineer or copy beyond what is permitted.

5. Term and survival

Specify how long the NDA lasts and how long confidentiality survives after the relationship ends — often two to five years, though genuine trade secrets may warrant longer. A perpetual obligation on ordinary commercial information is more likely to be challenged as unreasonable.

6. Return or destruction of information

Require the recipient to return or destroy confidential material on request or at the end of the term, and to certify destruction.

7. Remedies

NDAs commonly state that damages alone may be inadequate and that the disclosing party may seek injunctive relief. Indian courts grant injunctions to restrain misuse of confidential information under principles drawn from the Specific Relief Act, 1963 and Order 39 of the Code of Civil Procedure.

8. Governing law, jurisdiction and dispute resolution

Name the governing law (Indian law) and the courts or arbitral forum. Many commercial NDAs route disputes to arbitration; if you choose that path, draft the arbitration clause carefully, because a defective clause can be challenged later — see our note on setting aside an arbitral award under Section 34.

9. Boilerplate

Severability, no-waiver, entire-agreement, notices, and amendment clauses round out the document.

Enforceability: what makes an Indian NDA hold up

The single biggest issue for enforceability is Section 27 of the Indian Contract Act, 1872, which declares that any agreement restraining a person from exercising a lawful profession, trade, or business is, to that extent, void (subject to the goodwill-on-sale exception in the proviso). You can read the section on the official statute portal at India Code — Indian Contract Act, 1872.

A pure confidentiality obligation — “don't disclose or misuse my secrets” — does not by itself restrain trade and is generally enforceable. Problems arise when an NDA is dressed up as confidentiality but actually stops a person from working in their field. Indian courts have repeatedly held that a post-employment clause barring an ex-employee from joining a competitor is a restraint of trade and void under Section 27, even if labelled a “confidentiality” term. Protecting genuine trade secrets is permissible; preventing someone from earning a livelihood is not.

Clause	Likely enforceable?	Why
Duty not to disclose defined secrets	Yes	Protects information, not livelihood
Reasonable post-term confidentiality (e.g., 2–5 yrs)	Usually	Limited, proportionate to the secret
Injunction for threatened misuse	Yes	Supported by Specific Relief Act / Order 39 CPC
Blanket ban on ever working in the industry	No	Void restraint of trade under Section 27
Indefinite secrecy on ordinary commercial data	Doubtful	May be read down as unreasonable
Penalty far exceeding actual loss	Partly	Section 74 limits recovery to reasonable compensation

To improve enforceability:

• Tie restrictions to real secrets. Courts protect identifiable confidential information, not vague “know-how.”
• Keep the term and scope reasonable. Narrow, purpose-linked obligations survive scrutiny; sweeping ones get read down.
• Avoid disguised non-competes. If you need to restrict competition, understand that post-employment non-competes are generally unenforceable in India.
• Stamp it correctly. An unstamped or under-stamped agreement can be inadmissible in evidence until the deficiency and penalty are paid, which can stall urgent injunction proceedings. Stamp duty is governed by the relevant State Stamp Act (for example, the Karnataka Stamp Act in Bengaluru) — verify the current rate locally.
• Provide for liquidated damages carefully. Under Section 74 of the Contract Act, a court awards reasonable compensation not exceeding the stipulated amount; you cannot recover an arbitrary penalty.

A note on changing law: the criminal codes were renumbered in 2023–24 (the Indian Penal Code, 1860 was replaced by the Bharatiya Nyaya Sanhita, 2023, and the CrPC, 1973 by the Bharatiya Nagarik Suraksha Sanhita, 2023). The Indian Contract Act, 1872 was not part of that overhaul, so Section 27 retains its numbering. However, if your NDA cross-references any criminal provision (for example, criminal breach of trust, formerly Section 405–409 IPC, now under the BNS), check the current section number before relying on it.

How NDAs interact with IP protection

An NDA protects information by contract, but it does not register a right. For brands and inventions, layer the NDA with formal protection — for example, file early for trademark registration in Bangalore so your mark is protected independently of any contract. Confidentiality and registered IP work best together: the NDA covers the disclosure phase, registration secures the long-term monopoly.

Step-by-step: drafting your NDA

1. Decide one-way or mutual based on who actually discloses.
2. Identify the parties and the precise purpose.
3. Define “Confidential Information” — specific, not limitless.
4. List the standard exclusions.
5. Set obligations, security standards, and permitted recipients.
6. Fix a reasonable term and survival period.
7. Add return/destruction, remedies, governing law, and dispute resolution.
8. Stamp the document per the applicable State Stamp Act and sign.
9. Have an advocate review it against your specific commercial risk.

For complex or high-value arrangements, contract drafting and advisory sit within our corporate and commercial law practice.

Frequently Asked Questions

This article is for general informational purposes only and does not constitute legal advice. Laws change and every situation is different; please consult a qualified advocate about your specific matter.