Free Non-Compete Agreement Template for India
India is a critical jurisdiction to understand before enforcing a non-compete. Section 27 of the Indian Contract Act 1872 renders agreements in restraint of trade generally void. Our template includes legally enforceable alternatives — garden leave, non-solicitation, and confidentiality — that Indian courts do uphold.
Geographic Scope: the city or metropolitan area where the Employer operates
Restricted Activities: During the period of employment or contract engagement, the Restricted Party shall not, directly or indirectly:
During employment, the Restricted Party shall not:
1. Engage in or assist any enterprise in the development, marketing, or sale of SaaS products that directly compete with the Employer's product offerings
2. Accept employment or consulting engagements from listed direct competitors of the Employer
3. Solicit or divert the Employer's clients to a competitor
4. Use or disclose the Employer's technical or business Confidential Information for any competing purpose
The Parties acknowledge that these during-engagement restrictions are necessary to protect the Employer's legitimate business interests and are consistent with the Restricted Party's duty of fidelity to the Employer under Indian law. These restrictions do not fall within the prohibition of ICA 1872 s. 27 as they operate during — not after — the engagement.
For a period of 12 months from the effective date of separation following separation, the Restricted Party agrees, to the extent permissible under applicable Indian law, to refrain from the restricted activities set out in Clause 2 within the city or metropolitan area where the Employer operates. The Parties acknowledge that this clause may be unenforceable as a post-employment non-compete under ICA 1872 s. 27 as interpreted by Indian courts, and that the primary post-employment protections are the non-solicitation provisions in Clause 4 and the confidentiality obligations in Clause 5, both of which are enforceable.
Client Non-Solicitation (12 months post-separation): For a period of 12 months following the date of separation, the Restricted Party shall not, directly or indirectly, solicit, contact, or induce any Restricted Client to reduce or terminate their business relationship with the Employer, or to engage with any competing enterprise for services similar to those provided by the Employer.
Definition of Restricted Clients: "Restricted Clients" means all clients and prospective clients of the Employer with whom the Restricted Party had direct personal contact, or about whom the Restricted Party received material confidential information, in the 12 months preceding the date of separation.
Employee Non-Solicitation (12 months post-separation): For a period of 12 months following the date of separation, the Restricted Party shall not directly or indirectly solicit, recruit, hire, or attempt to solicit any employee, consultant, or contractor of the Employer with whom the Restricted Party had material professional contact during the engagement, without the Employer's prior written consent.
Trade Secret Protection: The Restricted Party acknowledges that the Employer's source code, algorithms, proprietary SaaS architecture, and client database constitute trade secrets. The Restricted Party shall not use or disclose these trade secrets during or after the engagement, consistent with the doctrine of breach of confidence and IT Act 2000 s. 43A.
Digital Personal Data Protection Act, 2023 (DPDPA 2023): To the extent the Restricted Party processes personal data of the Employer's employees, customers, or other data principals in the course of the engagement, the Restricted Party shall comply with all applicable obligations under the DPDPA 2023, including purpose limitation, data minimisation, storage limitation, and security safeguards. Upon termination of the engagement, the Restricted Party shall not retain any personal data except as required by applicable law.
Permitted Disclosures: Disclosure required by a court order or applicable Indian law, provided the Employer is given prompt written notice and a reasonable opportunity to seek a protective order, is permitted.
Return of Materials: Upon termination, the Restricted Party shall immediately return all Company property, including laptop, access credentials, and any copies of Confidential Information in any medium. Personal data of the Employer's customers and employees must be deleted in accordance with DPDPA 2023.
What Is a Non-Compete Agreement in India?
A Non-Compete Agreement is a contract in which one party (typically an employee, contractor, or business seller) agrees not to engage in a competing business or profession for a specified period and within a defined geographic area. In India, non-compete clauses are commonly included in employment contracts, service agreements, business sale agreements, and franchise arrangements. However, the enforceability of these clauses is severely restricted by Indian contract law, making India one of the most employee-friendly jurisdictions in the world when it comes to post-employment restraints.
The critical Indian legal principle is Section 27 of the Indian Contract Act 1872, which declares that every agreement by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is void to that extent. Indian courts — including the Supreme Court of India and various High Courts — have consistently applied this provision to strike down post-employment non-compete clauses, regardless of how narrowly they are drafted. This approach fundamentally distinguishes India from countries like the United States, United Kingdom, and Australia, where reasonable post-employment non-competes are generally enforceable.
While post-employment non-competes are generally void under Indian law, there are important exceptions and enforceable alternatives. Non-compete restrictions during the period of employment (including garden leave where the employee continues to receive full pay) are generally valid. Restrictions in connection with the sale of a business or goodwill are enforceable as a statutory exception under Section 27 of the Indian Contract Act 1872. Non-solicitation clauses (restricting an employee from poaching clients or colleagues) are more likely to be upheld by Indian courts than broad non-compete clauses. Confidentiality and trade secret protections remain enforceable and are the most reliable tool for protecting Indian businesses against unfair competition.
What's Covered in This Non-Compete Agreement Template
Our India-aware template focuses on enforceable protections rather than void post-employment non-competes, covering the legal mechanisms Indian courts will actually uphold.
During-Employment Restraints
Restricts the employee from engaging in competing business activities while employed — a restraint Indian courts consistently uphold as valid.
Garden Leave Provisions
Allows the employer to place an employee on garden leave (full pay, no active work) during a notice period, preventing immediate access to competitors during a sensitive transition.
Business Sale Non-Compete
Includes a post-sale non-compete clause for business acquisition contexts — one of the statutory exceptions to Section 27 of the ICA 1872 that Indian courts enforce.
Non-Solicitation of Clients
Restricts the departing employee from soliciting key clients for a defined period. Indian courts are more willing to enforce reasonable non-solicitation restrictions than broad non-compete clauses.
Non-Solicitation of Employees
Prevents the departing employee from poaching the employer's staff, protecting the workforce from targeted recruitment by former colleagues.
Confidentiality & Trade Secrets
Requires the employee to maintain confidentiality of trade secrets, proprietary technology, client lists, and other confidential information — enforceable indefinitely under Indian law.
DPDPA 2023 & IT Act 2000
Addresses obligations relating to personal data under the Digital Personal Data Protection Act 2023 and electronic records under the IT Act 2000.
Definition of Competing Business
Clearly defines what constitutes a competing business in the relevant market, avoiding ambiguity that would make any restraint harder to enforce.
Geographic & Time Scope
States the geographic area and time period of any restraint, with a note that overly broad post-employment restrictions will be struck down under Section 27 ICA.
Remedies & Injunctive Relief
Identifies available remedies including injunctions under the Specific Relief Act 1963 for breach of confidentiality and non-solicitation obligations.
Governing Law & Jurisdiction
Specifies Indian law as governing and designates a specific Indian court or arbitral forum for disputes.
How to Create a Non-Compete Agreement in India
Follow these steps to create the most effective protection available under Indian law.
- 1
Understand the ICA s.27 Limitation
Accept that broad post-employment non-competes are generally void in India under Section 27 of the Indian Contract Act 1872 regardless of how they are drafted. Build your protection strategy around enforceable alternatives.
- 2
Draft During-Employment Restrictions
Include clear restrictions on competing activities during employment, including garden leave provisions for the notice period.
- 3
Include Non-Solicitation & Confidentiality
Draft strong non-solicitation clauses (clients and employees) and a robust confidentiality provision covering trade secrets, client data, and proprietary information.
- 4
Tailor for Business Sale Contexts
If the agreement relates to a business sale, include a post-transaction non-compete for the seller — Indian courts enforce these as they fall within the Section 27 exception for sale of goodwill.
- 5
Execute on Stamp Paper
Execute the agreement on appropriately stamped non-judicial stamp paper. Both parties must sign. Ensure the agreement is standalone or clearly embedded in the employment contract.
Legal Considerations — Non-Compete Law in India
These are the most critical Indian legal points you must understand before relying on any non-compete restriction.
This template is for informational purposes only and does not constitute legal advice. Consult a qualified Indian advocate or legal practitioner for advice specific to your situation.
Reviewed for Indian law
Section 27 of the Indian Contract Act 1872 — The Core Rule
Section 27 of the Indian Contract Act 1872 provides that every agreement by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is, to that extent, void. Indian courts — including the Supreme Court of India in Niranjan Shankar Golikari v. Century Spinning and in Superintendence Company of India v. Krishan Murgai — have applied this provision strictly. Post-employment non-competes have consistently been struck down, even when narrowly drafted. This is a fundamental difference from US, UK, and Australian law.
What Indian Courts Do Enforce
Indian courts do enforce: (1) restraints during the period of employment; (2) garden leave clauses where the employee receives full pay; (3) post-sale non-competes in a business acquisition (the statutory exception for sale of goodwill under Section 27); (4) reasonable non-solicitation clauses limited in time; and (5) confidentiality and trade secret protections without any time limit. These are the tools Indian businesses should rely on.
Protection Through Confidentiality
In India, the most reliable protection against unfair competition is a robust confidentiality clause covering trade secrets, client lists, pricing data, source code, and know-how. Unlike non-compete clauses, confidentiality obligations are enforceable indefinitely under the Indian Contract Act 1872. Misuse of confidential information may also give rise to claims under the Information Technology Act 2000 and the DPDPA 2023 where personal data is involved.
Remedies Available in India
For breaches of valid restraints (during-employment restrictions, non-solicitation, confidentiality), the aggrieved party may seek an interlocutory injunction from the appropriate High Court under the Specific Relief Act 1963 and the Code of Civil Procedure 1908. Damages for loss suffered are also available. Breach of confidentiality relating to electronic data may attract additional remedies under the Information Technology Act 2000.
Frequently Asked Questions
Protect Your Indian Business with Enforceable Clauses
Doxuno's India-specific Non-Compete Agreement template focuses on the protections Indian courts actually enforce — confidentiality, non-solicitation, and garden leave. Download free and customise for your situation.
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