The Law Commission of India’s 2024 report, titled “Trade Secrets and Economic Espionage,” calls for both a Trade Secrets Bill and a separate, stricter legal framework to address economic espionage.
It emphasises that the theft of sensitive trade secrets threatens not only business interests but also poses significant risks to a nation’s economic security.
The 200-page report emphasises that while the definitions of economic and industrial espionage may overlap, the key distinction lies in the perpetrator.
What is Economic Espionage?
According to the Law Commission’s report, economic espionage refers to an “act of deliberate acquisition of confidential information from domestic companies and government entities to benefit a foreign State”.
“In this age of internet and technology, such sensitive information stored in electronic form is rendered even insecure,” reads the report.
Meanwhile, industrial espionage refers to the illegal and unethical theft of business trade secrets by companies.
While emphasising the importance of a separate legal framework to protect sensitive information, the Law Commission also points out that estimating the costs of economic espionage is difficult due to companies’ reluctance to openly discuss significant financial losses, fearing damage to shareholder confidence.
What ARE THE VARIOUS METHODS OF Espionage?
As per the Law Commission’s report, activities considered as espionage include (but are not limited to) the following:
- Eavesdropping through wiretapping, office bugging, or capturing cellular telephone conversations.
- Penetrating a computer or digital system by hacking into networks, hard drives, or software.
- Engaging in direct illegal observation and surreptitious photography.
- Using surveillance and reconnaissance techniques to gather confidential information.
- Trespassing on a competitor’s property.
- Stealing proprietary information, whether contained in physical documents, drawings, or on pen drives.
- Hiring a competitor’s employee who possesses the specific knowledge needed.
- Bribing a supplier or employee to gain access to confidential information.
- Planting an agent or ‘mole’ within a competitor’s organisation, whose true task is to compromise key employees, infiltrate computer databases, and intercept communications to extract confidential research, technologies, and information.
- Conducting false employment interviews to gain access to trade secrets from competitors’ employees.
Why we may need an Espionage Act?
The Law Commission’s report highlights the pressing need for a dedicated legal framework on economic espionage, pointing out the shortcomings of the Official Secrets Act, 1923, in tackling modern, technology-driven threats.
The report cites a 2014 FICCI survey, which identified business espionage as one of the top 10 risks for Indian companies and revealed that only 15–20% of corporate…
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