This is done by the employer to make sure that the employee will not become a competitor or will not disclose the trade secrets learnt during the employment which is of commercial value.
Generally this agreement will be renewed every year or once n two years as desired.
However once the employee resigns the company normally without breaching the agreement for a year or so, the employer has absolutely no right to interfere in his post-resignation employment or growth (Judgement by Supereme court).
On the general view such agreements will threaten them to obey the rules and go with comittment.
7th January 2008 From India, Madras