It does...
It is illegal for an Individual Indian Resident to do Foreign Margin Trading of any sort... so you cannot trade in any foreign option just like that...
However, it is legal for a Sole Proprieter or Proprietary Firm or LLC that is based out of any part of the "free" world (outside India) to do Foreign Margin Trading anywhere of anything (including
Weather futures traded at NYMEX now merged with CME

...
No
Long story short.... RBI & her LRS....
The RBI is OK with Indian residents trading Stocks (long only), vanilla ETFs, bonds and mutual funds and "non-leveraged" Forex (currency conversion) in global markets.
However, the RBI rules specifically prohibits "margin" and/or "leveraged" activities or foreign exchange transactions. The following restrictions will apply to an overseas trading account at IBKR:
1) No Margin facility (Pure cash account)
2) No trading allowed in leveraged instruments (CLPs, Leveraged forex) or margin products (Futures, options, etc.)
In lieu of that IBKR do not offer any margin facilities for Indian residents. For Indian residents anything foreign needs to be hard cash settled (legally)....