The common rule to play safe would be to not fund your trading account directly via your local bank by converting INR to USD. If you haven't funded that way, then you can bring the earned profits in India back as 'capital gain'. Since you used an intermediary online processor for depositing and withdrawing, it doesn't come under RBI jurisdiction. However, if you funded directly via bank wire initially, then you might get into trouble.
Though I have yet to test myself to see whether the bank has no problems with the users saying their forex profits were earned as capital gain in an online business or not...
Now having said that, I think it will be easier if one already does really earn in USD via any non forex related online business and use that EARNED DOLLARS to fund his international forex account instead of buying USD from RBI's depleting forex reserve. That will be perfectly legal as technically you never sent any money FROM India to fund the trading account. And by earning from forex, you are earning from your own hard earned dollars! So you have the right to bring that money in India and say proudly to the bank that you earned from your other NON forex business online.
I live in India too and have active trading accounts with multiple ECN brokers!
Luckily I do have my online business on Fiverr and plan to use that money to fund my trading account. Hope everything goes well! :thumb: