Is an NDA formally enforceable in India?

Yes, it is a contract governed by the Indian Contract Act, 1872. Courts can grant injunctions and award damages for breach, provided the terms are reasonable.

Should I use a one-way or mutual NDA?

Use a one-way (unilateral) NDA if only one party is disclosing information. Use a mutual NDA if both parties will be sharing confidential data with each other.

Is stamp paper required for an NDA?

While not always mandatory for it to be valid, executing an NDA on non-judicial stamp paper (typically ₹100-₹500) significantly strengthens its evidentiary value in court.

How long should the confidentiality period be?

A period of 2-5 years is common and generally considered reasonable. An indefinite period for information that is not a trade secret might be challenged in court.

Can an NDA be signed digitally?

Yes, under the Information Technology Act, 2000, electronic signatures (like Aadhaar e-sign) are a valid way to execute an NDA.

Can I include a non-compete clause in an NDA?

Non-compete clauses have limited enforceability in India, especially post-employment or after a contract ends, as they can be seen as a restraint of trade under Section 27 of the Contract Act.

What is the penalty for breaching an NDA?

The agreement can specify a 'liquidated damages' amount for a breach. If not specified, the disclosing party can sue for actual damages and seek an injunction to prevent further disclosure.

Is this agreement suitable for employees?

Yes, it can be used for new employees. Alternatively, a confidentiality clause can be included directly within the main employment contract.

What is the difference between unilateral and bilateral?

A unilateral NDA is a one-way agreement where only one party discloses confidential information. A bilateral (or mutual) NDA is a two-way agreement where both parties share confidential information and both are bound to protect it.

Is notarization compulsory for an NDA?

Notarization is not mandatory for an NDA to be valid in India, but it can add a layer of authenticity, especially if the document needs to be used internationally.

Non-Disclosure Agreement (NDA) Format & Generator Online

Non-Disclosure Agreement (NDA) in India: Safeguarding Your Business Secrets

In today's competitive business environment, sharing confidential information is often necessary to explore collaborations, secure investments, hire talent, or outsource services. However, without proper safeguards, this can expose your trade secrets, strategies, client data, or intellectual property to significant risks. A Non-Disclosure Agreement (NDA), also known as a confidentiality agreement, provides essential protection by binding the receiving party to maintain secrecy.

This guide covers everything you need to know about NDAs in India— their purpose, types, key clauses, enforceability, drafting process, common uses, and best practices to create an effective agreement.

What is a Non-Disclosure Agreement?

An NDA is a contract between two or more parties where one (the disclosing party) shares confidential information with the other (the receiving party), who agrees not to disclose it to third parties or use it for unauthorised purposes. Governed primarily by the Indian Contract Act, 1872, NDAs are useful records of understanding as long as they meet basic contract requirements: offer, acceptance, consideration, and lawful object.

Common Types of NDAs

Unilateral NDA: One party discloses information (most common)
Bilateral/Mutual NDA: Both parties share confidential information
Multilateral NDA: Three or more parties involved

When Should You Use an NDA?

NDAs are crucial in scenarios such as:

Discussing business ideas with potential investors or partners
Sharing technical know-how with manufacturers or developers
Onboarding employees with access to sensitive data
Engaging freelancers, consultants, or contractors
Pitching to clients or during mergers/acquisitions
Protecting software code, formulas, or marketing strategies

Essential Clauses in a Strong NDA

A robust NDA must clearly define:

Parties involved (disclosing and receiving)
Definition of confidential information (broad yet specific)
Permitted purpose of disclosure
Obligations of the receiving party (non-use and non-disclosure)
Exclusions (public domain info, independently developed, etc.)
Duration of confidentiality (typically 2–5 years, perpetual for trade secrets)
Return or destruction of information upon termination
Consequences of breach (injunctions, damages)
Governing law and dispute resolution (usually arbitration)
Non-compete/non-solicit clauses (if reasonable and limited)

Execution in India

To strengthen the document's standing, it is advisable to:

Execute on non-judicial stamp paper (₹100–₹500, varies by state)
Include two witnesses
Notarization is recommended though not mandatory
Avoid overly broad or perpetual restrictions

State stamp duty details can be checked on portals like Maharashtra GRAS.

Common Mistakes to Avoid

Vague definition of confidential information
Unreasonably long duration or broad non-compete
Using plain paper instead of stamp paper
No clause for return/destruction of data
One-sided terms leading to refusal

Tips for Effective NDAs

Tailor the agreement to the specific disclosure
Mark shared documents as “Confidential”
Limit recipients on a need-to-know basis
Review and update periodically
Consult a professional for high-stakes information

For business collaborations, you may also need a Partnership Agreement or Employment Contract.

Conclusion

A well-crafted NDA is indispensable for protecting your competitive edge in India's dynamic business landscape. It builds trust while providing recourse against breaches.

Our free online generator creates a professional, India-compliant NDA instantly—customizable for unilateral or mutual needs, multilingual, and ready for stamp paper. Secure your confidential information today!

For contract law references, visit the India Code portal.

Non-Disclosure Agreement (NDA) Generator

Guide to Non-Disclosure Agreement (NDA) in India