India's markets regulator has proposed letting foreign portfolio investors trade physically settled non-agricultural commodity derivatives, opening delivery-linked contracts in crude oil, natural gas, gold and silver that are currently restricted to cash-settled exposure. The Aug. 11 consultation paper would also permit overseas participation in non-agricultural index derivatives regardless of settlement type. As of the proposal date, foreign portfolio investor open interest in commodity futures stood at Rs 1,255 crore and options open interest at Rs 8,708 crore, with SEBI saying existing access has already driven notable activity in crude oil and natural gas options. The regulator said broader participation could deepen liquidity and improve price discovery, while proposed safeguards would require investors to exit or roll positions three days before delivery, with automatic transfers and a proposed Proprietary Risk Absorption Charge meant to manage physical settlement risk. Public comments are open until Sept. 1, 2026.