If you’re asking when forex trading became legal in India, the formalisation of forex trading began in stages. Institutional forex trading has been legal since the 1970s, but retail forex trading for individuals became legal in 2008, when Indian exchanges launched currency derivatives under regulation by SEBI and oversight by the RBI.

Key Legal Milestones

1. 1978 – RBI Begins Managing Forex Market

• India adopted a managed exchange rate system.
• Only authorised dealers and banks were allowed to engage in forex transactions.

2. 1991 – Economic Reforms

• India liberalised its economy, leading to greater demand for foreign exchange.
• The Foreign Exchange Regulation Act (FERA) was replaced by FEMA (Foreign Exchange Management Act) in 1999, modernising forex law.

3. 2008 – Retail Forex Trading Legalised (INR Pairs Only)

• Currency futures trading launched on NSE and BSE.
• For the first time, retail traders could legally trade USD/INR futures and options.
• Later, INR-based crosses like EUR/INR, GBP/INR, and JPY/INR were added.

4. Current Legal Status (2025)

• You can legally trade forex in India through SEBI-registered brokers on Indian exchanges.
• Only these four INR-based pairs are legal for Indian residents:
  • USD/INR
  • EUR/INR
  • GBP/INR
  • JPY/INR
• Trading non-INR pairs (e.g. EUR/USD, GBP/JPY) with offshore brokers is illegal under FEMA and can result in penalties.

Conclusion

If you’re asking when forex trading became legal in India, the key turning point was 2008, when the NSE and BSE launched currency derivatives under SEBI and RBI regulation, allowing retail traders to legally participate in INR-based forex trading.

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