Restrictions on Foreign participation in Stock markets & remittances are well placed. U must understand that the Indian economy is still not as strong as western economies.. any wild gyrations in stock-markets & currencies can pose serious problems... remember the asian-currency crisis.
Even with all these restrictions, the FIIs (foreigners) already corner a sizeable part of Indian stocks. FIIs are basically speculators who are not interested in long-term investing. If free-flow of currencies are allowed without investment limits to FIIs, then they will devastate our economy. India still has a long way to go... & its better to be safe than sorry.
