Mumbai, Aug. 11 -- The Securities and Exchange Board of India (Sebi) has proposed widening the participation of foreign portfolio investors (FPIs) in India's exchange-traded commodity derivatives market, including allowing them to trade physically settled non-agricultural commodity contracts.

FPIs are currently allowed to trade only in non-agri commodity derivatives that are cash settled, such as crude oil and natural gas contracts. Sebi opened up that segment to foreign investors in June 2022. Bullion, base metals and agri derivatives, however, are compulsorily deliverable upon contract expiry.

In a consultation paper issued on Tuesday, the market regulator suggested allowing FPIs to trade in non-agricultural index derivatives contract...