Mutual vs One-way NDA in India: 10 Clauses to Check Before You Sign

Non-disclosure agreements are the most signed and least read contracts in business. Sales teams sign them to start a conversation; founders sign them before every investor meeting. Most of the time nothing goes wrong — but when information does leak, or when a counterparty uses an NDA to block you from working with a competitor, the wording decides the outcome.

Mutual or one-way?

Use a one-way NDA when only one side discloses (you are pitching a supplier your process; a candidate company shares data for due diligence). Use a mutual NDA when both sides will share. A one-way NDA in favour of the other party, when you are also disclosing, leaves your own information unprotected.

The ten clauses

1. Definition of confidential information. Does it cover only information marked confidential, or everything disclosed? If marking is required, oral disclosures should be confirmed in writing within a stated number of days.
2. Exclusions. Information that is public, already known to the recipient, independently developed, received lawfully from a third party, or required to be disclosed by law or a regulator should be excluded. Missing exclusions are the most common drafting gap.
3. Purpose limitation. Information may be used only for the stated purpose — evaluating a transaction, a pilot, a supply arrangement.
4. Permitted disclosures. Employees, advisers, auditors and financiers on a need-to-know basis, bound by similar duties.
5. Term and survival. How long the agreement lasts and how long obligations survive — two to five years is common for commercial information; trade secrets should be protected for as long as they remain secret.
6. Personal data. If personal data will be shared, add purpose, security and deletion obligations consistent with the Digital Personal Data Protection Act, 2023 and the rules under it (being brought into force in phases — check which obligations apply now).
7. Return or destruction. On request or at the end of discussions, with a carve-out for automatic backups that remain confidential.
8. Hidden restrictive covenants. Watch for non-solicitation of employees, non-compete or exclusivity tucked into an NDA. Post-relationship restraints of trade are generally void under Section 27 of the Indian Contract Act; even so, they create argument and cost. Remove them or narrow them to a short, specific non-solicit.
9. Remedies. An acknowledgment that damages may be inadequate and injunctions may be sought is normal. Fixed penalty sums are not — under Section 74 of the Contract Act, a court awards reasonable compensation up to the stated amount, not the amount automatically.
10. Law, courts and arbitration. Indian law with a named seat; for small NDAs, courts may be simpler than arbitration.

Stamping and signatures

NDAs are agreements and attract stamp duty under the relevant state's stamp law; the amount is often small but varies by state. Electronic signatures and Aadhaar-based eSign are valid under the Information Technology Act, 2000 for most commercial agreements. E-stamping is available in many states. An unstamped agreement can still be stamped later with a penalty if it ever needs to be produced in evidence — but it is simpler to stamp at the start.

A two-minute triage before you sign

• Who is disclosing? Pick mutual or one-way accordingly.
• Are the five standard exclusions present?
• Is there any non-compete, exclusivity or non-solicit? Delete or narrow it.
• Is personal data involved? Add the data clause.
• Do you agree with the governing law and forum?

The NDA sheet in the free checklist workbook lists all ten clauses with a status and risk column so a reviewer can mark a draft in minutes.

Three NDA situations, three different drafts

Investor conversations

Many investors will not sign NDAs at the first meeting because they see many similar companies. Share a deck that contains nothing you would not want shared, and sign an NDA (or rely on a confidentiality clause in the term sheet) before the data room opens. Data rooms should log who viewed what.

Vendor or pilot evaluation

When a vendor needs access to your systems or data for a pilot, a two-page NDA is not enough if personal data is involved — you need data-processing terms (purpose, security, deletion), even for a short pilot. Limit the data shared to what the pilot needs, and use test or masked data where possible.

Acquisition discussions

Both sides share sensitive information, so use a mutual NDA with a standstill (if listed shares are involved), a non-solicitation of employees for the discussion period plus a short tail, and clear rules on who in each company may receive the information. Clean-team arrangements may be needed where the parties are competitors.

Common mistakes

• Signing the counterparty's one-way NDA when you are also disclosing.
• An “all information” definition with no exclusions.
• A hidden exclusivity or non-compete clause.
• No owner tracking expiry — obligations lapse or outlive their purpose unnoticed.