Settlement refers to how a Futures or Options contract is finalized at expiry. Most index Futures and Options in India are cash-settled — the profit/loss difference is settled in rupees, with no physical delivery. Certain stock derivatives can involve physical settlement, meaning actual delivery of shares — always confirm the settlement type for a specific contract before holding it to expiry.
Related Reading
See how settlement fits into the full Futures contract lifecycle in What Is a Futures Contract? A Complete Beginner’s Guide.