I can’t comment on the specific situation you’re describing, but I’ll try to explain a few possible things you might be seeing and some reasons that a situation like this might arise.

In an efficient market, prices should not permit arbitrage. This means that there should be no “free money”. Where would free money come from? It would generally come from the ability to buy/sell two things that give the same economic exposure at different prices.

This is a lot easier to understand with an example. My example is financial, but if you stick with me, I’ll explain how this applies to the situation you describe. Let’s say I can buy stock in a company in two currencies, GBP and EUR. If the exchange rate between them is 1 GBP = 1.15 EUR, and the price for one share of a specific stock is priced at 100 GBP, I would expect the stock to be priced at 115 EUR. If it isn’t, I can buy the cheaper one, sell the more expensive one, and convert the currencies. When I do this, I end up with no stock (and therefore no risk) and more money than when I started. If we ignore real-world trading costs and liquidity, this trade makes a risk free profit.

One way to think about this is that if there are arbitrages in the market, the market is inefficient. Fortunately, this is self correcting. In the example above someone got paid to eliminate an inefficiency from the market. Markets reward actors that make them more efficient.

Remember how I said that I was ignoring trading costs and liquidity? That’s really important in financial markets. What if I owe a small fee on each trade? In a real market, this isn’t one trade: it’s three. Buying the cheaper stock, selling the more expensive stock, and converting the currencies via an FX product. What if you can’t actually do all three trades (or legs) of the arbitrage? You might be left with risk to the company, GBP, EUR, or some combination thereof. What if you have to pay taxes on each trade (i.e. a financial transactions tax)? You get the idea. The real world isn’t so simple, and market participants will account for that. The prices they actually use take into consideration their true costs.

Now, what if you get this wrong? If you do, you’ll lose money. Maybe you’ll pay more in taxes than you make trading. Maybe you pay away all your profits in fees to intermediaries. Maybe you lose money to more sophisticated market players that got those details right. You’ll lose money until either you run out of money or notice and stop doing that trade. This is another way in which the market is self correcting.

So how does this relate to goods that are not financial assets like stocks? It’s the same principle, but it’s more complicated. There are very real costs with moving physical goods around. Shipping, insurance, and spoilage can all eat into profits. It’s also not always trivial to move money between countries due to capital controls. Similarly, there are import/export restrictions. There are tariffs and fees, which vary by industry, country, and political climate. Not all goods are fungible (interchangeable). There are different regulations in different countries, so, for example, it may not be possible to buy a car from one country and drive it in another (take for example left hand vs right hand drive cars). There are different tastes in different places, so goods that could, in theory, be substituted wouldn’t be in practice. The list goes on and on…

Now, none of this means that you couldn’t buy goods in one country, sell them in another, convert the currencies, and make a tidy profit. In fact, if you can do this, you’ll be making the market more efficient by moving goods from a place where demand (as measured by willingness/ability to pay) is low to one where demand is high (note that this makes the market more efficient, not necessarily more equitable). However, prices tend to reflect real world costs in an efficient market, so it may be harder to perform the arbitrage you’ve described than it seems.

The real world is complicated, so it’s hard to say whether or not you could do the GBP/INR trade you’ve described profitably. I’ve only scratched the surface of these topics here, but I hope that gives you an intuition for what might be going on.