i asked same questions to SEBI… they have not given any reply because they said that i am asking clarification not information…
Fema has not banned derivative trading specifically.
also Schedule 1 allows investment in foreign securities
Lrs Prohibits Forex trading outside India and also it doesn’t allow to take Leverage.
also from 26-02-2019 schedule 1 allows certain Forex and commodity derivative contracts (may be for hedging purpose)
You can read all above information from the website of RBI
Only RBI & any Fema expert can give us more clarification about this.
RBI also take queries related to Foreign exchange …I think that is better option for us to get accurate information.