Yes they are legal and regulated by RBI norms.

Dear Client,

Now a days online trading is more prevalent, gone are the days of traditional method of calling a commodity broker to place orders and waiting for a call back to give you a filled order price. All its needs that broker registered with SEBI as no stock broker shall buy or sell or deal in securities except under, and in accordance with the conditions of a certificate of registration obtained from the Securities & Exchange Board of India (SEBI).

Only currency pairs involving INR can be traded legally on Indian Exchanges. 

2)In India, currency pairs like US Dollar and INR, Euro and INR, Great Britain Pound and INR, JPY and INR, etc. are all legal

3) Trading on other pairs is illegal under FEMA Act.A Forex trade that happens between two foreign currencies is considered illegal in India and Indian citizens are not allowed to trade foreign currencies overseas both directly and indirectly.

there is no regulation on forex trading

so if you sign up with an exchange or portfolio management service provider, you do so at your own risk and you wont have the protection of any regulator like SEBI overlooking and monitoring the transactions carried on by the bourse on your behalf

it is not illegal also. It is just not regulated

Dear Sir,

It is not legal in India, better avoid it.

Hi,

You may do the desired registration and proceed for it.

Its illegal because so far RBI restricted to trade in any kind of overseas margin trading segment. You can invest elsewere in the overseas segment except margin trading. The same kind of restriction is there in developed markets like United States, Canada too.

Only currency pairs involving INR can be traded legally on Indian Exchanges. There are 4 such pairs available to trade. Trading on other pairs is illegal under FEMA Act. ... Its perfectly legal to trade anything with Indian Exchanges(NSE, BSE, MCX-SX) offering Forex Instruments Currently USDINR, GBPINR, JPYINR, EURINR).

Note that you are allowed to trade only through brokers who are registered with the authorized exchanges such as NSE, MCX-SX, and/or the BSE. If you trade in pairs other than those allowed by the RBI, then it is considered illegal under the FEMA act. A foreign broker is required to deposit the funds in USD to trade using the eligible pairs.