Option 1 states that both statements 1 and 2 are incorrect. Let`s analyze each statement individually to determine if they are correct or not.

Statement 1: `The Indian cities like Dacca, Murshidabad, and Surat were known all over the world as centers of trade and industry in the pre-colonial period.`

This statement is generally correct. In the pre-colonial period, these cities were indeed significant centers of trade and industry. They were renowned for their flourishing textile industries, skilled artisans, and active maritime trade.

Statement 2: `Such centers of trade and industry went down in the face of foreign competition in the colonial period.`

This statement is also correct. During the colonial period, the British East India Company and subsequent British rule in India introduced policies and established a monopoly that undermined the existing Indian trade and industries. The British aimed to protect their own industries and maximize their profits, resulting in the decline of Indian trade centers.

Therefore, both statements 1 and 2 are correct. The provided answer "Option 1: 1 and 2" is incorrect.

Alert - correct answer should be: Option 3: 3 only.