Software and source-code escrow arrangements for foreign technology buyers in India.
A foreign technology buyer licensing critical software from an Indian vendor, or outsourcing development to an Indian supplier, faces a continuity risk: if the vendor fails, is acquired, or stops supporting the product, the buyer can lose access to the source code it depends on. Source-code escrow, where the code and build materials are deposited with a neutral agent and released to the buyer on defined trigger events, is the standard answer, but the arrangement only works if the release triggers, the verification, and the insolvency interaction are drafted precisely under Indian law.
The weak points are usually vague release triggers, untested deposits that turn out to be incomplete, and uncertainty about whether an escrow release survives the vendor insolvency moratorium under the IBC. We structure the escrow agreement with enforceable triggers, build in deposit verification so the escrowed material is actually usable, and align the arrangement with the IBC so the buyer continuity right is protected if the vendor enters insolvency.
Designing the three-party escrow arrangement between the foreign buyer, the Indian vendor, and the escrow agent.
Drafting precise, enforceable release events, insolvency, abandonment, material breach, and support failure, that leave no ambiguity.
Building verification so the escrowed source code, build scripts, and documentation are complete and usable on release.
Aligning the escrow with the IBC so a release survives the moratorium and the buyer continuity right is protected.
Defining the licence the buyer receives on release, including the right to maintain and modify the code.
Ensuring the arrangement is enforceable across the foreign buyer and Indian vendor jurisdictions.
To protect continuity. If the Indian vendor fails, is acquired, or stops supporting critical software, escrow gives the buyer access to the source code and build materials so it can maintain the product. Without it, the buyer can be stranded.
It can, if the arrangement is drafted to align with the Insolvency and Bankruptcy Code. The interaction with the moratorium has to be handled deliberately in the escrow agreement, otherwise a release may be challenged when the vendor enters insolvency.
Precise release triggers and verified deposits. Many escrows fail because the triggers are vague or the deposited code is incomplete or unbuildable. Verification and tightly drafted triggers are what make the escrow work when it is needed.
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