All the players who are currently under IPL contract cannot play anywhere else except for the IPL and anyone else who is not currently under any kind of contract can play anywhere else and also outside India.
That would have been the best decision for both the players and BCCI because then we wouldn't have had this conversation we are having right now.
Don't expect any leniency from the BCCI. There are 38 first class teams in India and that means that we have some 500-600 regular first class players. Out of this pool, only around 20% get an opportunity to participate in the IPL. For the remaining players, there are hardly any avenues to showcase their talent. If they were allowed to participate in some of the foreign leagues, then it would have been mutually beneficial for both the sides. I don't think that the IPL will suffer a big setback, if players such as Siddhesh Lad, Sai Sudharsan or Dhruv Patel participate in a few foreign leagues.
With India being a highly populated country I don't think there is going to be a shortage of talent anywhere or at any given time. so, I think it wouldn't hurt much for the Indian cricket board to give the less known players a chance to perform in foreign leagues.
in there, their good show great performance and also catch the eye of the Indian cricket board. by doing that I think selection would be a lot easier. and a lot more players will be recognized and coming forward. but I obviously don't expect that to be done by the BCCI