The correct answer is option 2, which states that statement 1 and 2 are correct. Let`s dissect each statement to understand why this is the correct answer:
Statement 1: The End Use Monitoring Agreement (EUMA) does indeed clear the way for the sale of US military equipment to India. This means that the agreement allows for the purchase of military equipment from the US.
Statement 2: The EUMA also allows the US to verify whether India is using the weapons purchased from the US for their stated purpose. This means that there are monitoring mechanisms in place to ensure that the weapons are being used appropriately.
Statement 3: This statement is incorrect. The EUMA does not restrict India from passing on US military technology to any country other than Afghanistan. The agreement`s focus is on monitoring the use of weapons, not on restricting technology transfer.
Therefore, the correct answer is option 2 since statement 1 and 2 are correct. However, it is important to note that statement 3 is incorrect.