The Securities and Exchange Board of India (Sebi) has proposed permitting cash settlement for select agricultural derivatives, a significant shift from the existing mandatory physical settlement framework. This change is intended to revive trading volumes and enhance liquidity in India's agricultural derivatives market. Physical settlement has been compulsory to ensure futures prices align closely with spot prices and to limit excessive speculation. By allowing cash settlement, Sebi aims to make the market more accessible and efficient, potentially attracting more participants and improving price discovery mechanisms in the commodity markets. This proposal reflects Sebi's efforts to modernize and strengthen the agricultural derivatives segment in India.