Is Forex trading illegal in India? Can Indians trade Forex Legally?

We are getting many requests from our followers from India asking if Forex trading is allowed in India? So, I wanted to take this opportunity to share my findings with our followers since I am from India too. So, Forex trading in India is allowed as long as you trade with registered local brokers with the state acknowledged trading pairs. However, international retail Forex Trading in India is illegal.

India Forex trading research

Updated on 6 April 2020 | Let’s get this straight! I am not a legal expert, hence my answers in this short commentary do not constitute as legal advice. Neither of these findings serves as an academic reference. My sole purpose with this research is to understand why is Forex trading illegal in India.

Thus, this short research is based on a number of short talks with local experts. Additionally, I have read multiple rulings, the government regulation on ETF trading and Futures trading to find out whether or not Forex Trading is legal in India.

Is Forex trading allowed in India?

Of course, you can trade Forex in India. In fact, Forex has become a daily routine of many Indian lives. But if we are asking about retail forex trading in India, the answer is there are limitations.

You can trade Forex in India with Indian Exchanges (NSE, BSE, MCX-SX) which offers Forex Instruments. However, Indian Exchanges currently offer USDINR, GBPINR, JPYINR and EURINR pairs for trading purposes.

Trading non-INR Forex pairs is illegal in India under the FEMA act.

How can I trade Forex in India?

Many international Forex brokers allow Indians to open accounts. Additionally, some of these brokers even try to have training academies in big Indian cities. However, if you are an Indian resident and wish to trade Forex, you cannot trade all the trading instruments by law.

In short. global Forex market is not so global in India. It is true that the foreign exchange (Forex) market is decentralized. Theoretically, you can freely buy one currency and sell another one to take advantage of the price movements. However, there are countries seeing this decentralized market as a sovereignty threat. Thus, due to sovereignty issues the Indian government has limited Forex trading in India.

Foreign exchange rules in India used to be even tougher in India a few years back. Now, RBI has slightly eased Forex trading rules. Since India is a net service exporting country, the country needs to ease Forex rules even further. But it is unlikely that we will have completely open financial markets anytime soon.

“Writing laws is easy, but governing is difficult.”
― Leo Tolstoy

So, the government has not forbidden Indians to trade Forex. They have limited trading for Indian residents to only trade currency pairs bench-marked against INR (Indian Rupee). As a an Indian resident, as long as you are trading through an Indian Brokerage, which allows access to Indian Exchanges such as the NSE, BSE, MCX-SX and providing access to currency derivatives is entirely legal. The following is the list of Indian INR Forex pairs:


But, the Reserve Bank of India on the 10th of December 2015 allowed exchanges to offer cross-currency futures contracts and exchange-traded currency options in three more currency pairs. The RBI allowed exchanges to offer cross-currency futures contracts. The exchange-traded currency options in the pairs of EUR-USD, GBP-USD, and USD-JPY with immediate effect.

Indian Forex Reserves

So, why is India limiting Forex trading?

So, let’s study the logic behind the Reserve Bank of India (RBI). When you trade EURUSD  with “non-Indian” traders/brokers, if and when you lose you would buy USD from RBI. This results in an increase in the current account deficit (lack of foreign currency reserve). Essentially speaking, RBI is artificially claiming to keep Indian ForexReserves as their main priority.

India’s total foreign exchange (Forex) reserves stand at around US$442 billion as of the 1st of November 2019.

How to trade Forex legally in India?

Assuming that you want to trade EURUSD, USDJPY or EURJPY or other possible combinations, but your local exchange does not offer such an instrument.

In this case, you may trade USDINR and EURINR that the INR gets eliminated and technically end up trading USD vs EUR.  There is however a big disadvantage of trading Forex via crosses this way and it is the increase in transaction costs and there is often lack of liquidity.

Meanwhile, you should note that CFD platforms are not legal in India. Thus from a broader perspective trading on leverage is not allowed in India. You as a trader should know your limits and act accordingly.  So far, the government has not really cracked down on retail traders however there have been major crackdowns on a number of brokers illegally operating in India.

There has been regulated and unregulated brokers trying to establish their branches in India under different names, from education academies to training schools or consulting agencies. These entities often get away with their activities from a few months to a few years until someone gets to report them to the local authorities. Such as the xDirect Indian office raid earlier in 2016.

List of countries Forex trading is restricted 

List of Forex trading restricted countries are the following:

  • Belarus
  • Bosnia & Herzegovina
  • British Columbia (Canada)
  • Bulgaria
  • Burma
  • China (Strict regulations and event total ban)
  • Cuba
  • Indonesia
  • Ivory Coast
  • Iran
  • Liberia
  • Macedonia
  • Malaysia
  • Montenegro
  • Myanmar
  • Nigeria
  • North Korea
  • Pakistan
  • Quebec (Canada)
  • Romania
  • South Korea
  • Sri Lanka (Recently relaxed)
  • St. Helena
  • Sudan
  • Syria
  • Ukraine
  • Zimbabwe

India is not the only country to restrict Forex trading. Indeed, Forex trading is restricted in twenty countries globally. These countries promote propaganda to push their citizens away from Forex trading (online or offline). Often you’d see some of these countries painting the picture for the west as evil.

For India, trading on other pairs rather than defined by RBI is illegal under the FEMA Act. Trading forex in India through an online broker is a non-bailable offense in India. With many online brokers who misguide retail investors claiming forex trading performed legally through them. Moreover, RBI claims the restrictions are there to prevent retail investors/traders from losing big time. However, many India citizens believe that the main reason is to stop currency outflow. I meanwhile believe that RBI will ease in their limits in the coming period as India is going through the financial change.

Think we missed something? Let us know in the comments section below.

  1. Prasant says:

    In india forex should be legal…for traders its a good thing…and also for the country…
    Indian government also use forex for investment…thn y normal people cant??
    We must raise our voice for this…we want fully legal forex trading in india…

  2. Harsh Lalwani says:

    Please explain how to open Trading account to perform forex trading legally in india.?

  3. Asif says:

    How can the celibraties can promote OCTAFX in india. Is that legal. Advice please

  4. Ajinkya says:

    What your reviyon OctaFX. Yuvraj singh is promoting it through ads. How has the government allowed it when it’s illegal in India?

  5. Milind Arora says:

    Please explain how to open Trading account to perform forex trading legally in india.

  6. Milind Arora says:

    What you think about IXGlobal. Are they legal trader or they are not even the trader but helps as service in forex trading.

  7. Ash15 says:

    If we earn thats increasing usd in indian forex reserve right? So why india not making its legal here?
    Since many years indians were trading in forex from international brokers

  8. akash says:


    are we allowed to work as a commission trader
    that is we trade on a companys account not ours and take profit splitting from them in india..??

    plz answer

  9. Claudia Davis says:

    After weeks of turmoil and sadness that GToptions brought upon me and my family after I lost GBP110,000.

    Part of this comment was edited/deleted by the admin due to misleading advertorial.

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