Compliance
Can You Start a Prop Trading Firm in India?
Starting a prop firm in India: why the RBI Alert List matters, what FEMA covers, and why Indian founders need specialist legal advice first.
- By PipValley Editorial
- Published
- 4 min read
India has a large and growing trading audience, and searches like "how to start a prop trading firm in india" and "is prop trading legal in india" show up in our Semrush data. The opportunity is real. So is the regulator's position on forex, which is stricter than in most markets prop firms serve.
What is the RBI Alert List?
The RBI publishes an Alert List of entities that are neither authorised to deal in forex under the Foreign Exchange Management Act, 1999 (FEMA) nor authorised to operate electronic trading platforms for forex. In February 2023 it widened the list to include sites that appear to promote such entities, including through advertising or claimed training and advisory services. The RBI says the list is not exhaustive: absence from it does not mean authorisation.
On October 22, 2024, the RBI added 13 entities, bringing the list to 88. They included FundedNext and Smart Prop Trader, according to PTI. In November 2025 it added seven more, for 95 in total, according to Gulf News.
What does that mean for a founder?
- Forex-based evaluations aimed at Indian residents carry a visible risk of appearing on the Alert List.
- Promotion matters too: affiliates and educators who advertise unauthorised platforms can themselves be named.
- Payments are harder: Indian payment rails for trading-adjacent businesses are restricted.
- Futures, stocks or other markets raise different questions, again for an Indian lawyer.
What should you ask an Indian lawyer?
If your audience is mainly Indian, take the answer seriously before spending on technology. A firm that has to exclude its home audience after launch has nobody left to sell to.
- Does a simulated forex evaluation sold to Indian residents fall within FEMA or the ETP Directions?
- Should we restrict India entirely, and how do we enforce that?
- If we are based outside India, does marketing to Indians change our exposure?
- Is there a market or product structure that fits Indian rules?
Questions
Is prop trading legal in India?
It depends on the product. The RBI has named some prop firms on its Alert List of entities not authorised to deal in forex under FEMA. Indian residents and founders should get Indian legal advice.
Which prop firms are on the RBI Alert List?
In October 2024 the RBI added FundedNext and Smart Prop Trader among 13 entities, per PTI. Check the RBI's current list directly, because it is updated and not exhaustive.
Can an Indian founder run a prop firm for non-Indian traders?
Possibly, through a structure your lawyers approve, but Indian residency, FEMA and banking rules all apply to the founder. Take advice in India and in the country where the company sits.
Sources
Illustrative figures, not a forecast. Nothing on this site is legal, tax or financial advice. PipValley is a web design studio; we don’t sell challenges, run trading accounts or provide trading platforms. Spotted something out of date? Tell us and we’ll fix it with the date.
Keep reading
Related guides.
Are Prop Firms Regulated? The State of Play in 2026
Do Prop Firms Need a License? What to Ask a Lawyer
How to Start a Prop Firm in 2026: An Operator's Guide
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