The `Naropa` festival is indeed celebrated annually in Ladakh. The festival, often referred to as the "Kumbh Mela of the Himalayas," is one of the biggest and most significant events in Ladakh`s cultural sphere.

Now, let`s consider the other options:

Option 1, Sikkim, is incorrect because Sikkim has its own set of festivals, such as Losar, Lhabab Duechen, and Drupka Teshi, but Naropa is not one of them.

Option 3, Arunachal Pradesh, is also incorrect. This state is famous for indigenous tribal festivals like Reh, Ziro, and Solung, but Naropa festival is not held here.

Option 4, Nagaland, is again incorrect. This North-Eastern state is famous for the Hornbill Festival, among others, but doesn`t celebrate the Naropa Festival.

So, the Naropa Festival is unique to Ladakh, thus making option 2 the correct answer.