Its not a gov link but i have gone through this discussion and i think it might be helpful in knowing Indian traders insight.. https://www.quora.com/Why-is-forex-trading-illegal-in-India
and secondly it also indicates that
This link clearly shows that it is illegal
"However if you send money to out of india, to FOREX brokers inorder to trade in any derivatives, Its illegal and liable for imprisonment, fine etc.
Indian residents can trade currency futures on India based exchanges only
I don;t know why you think somehow it is legal for Indian residents!