The correct answer is option 2, Mumbai. The first cotton mill in India was established in Mumbai. Mumbai, formerly known as Bombay, was a prominent trading port during the colonial era. The first cotton mill, known as the Bombay Spinning and Weaving Company, was set up in Mumbai in 1854. This marked the beginning of the textile industry in India. Mumbai`s strategic location and access to raw materials made it an ideal location for the establishment of cotton mills. The textile industry played a crucial role in India`s economic development and was one of the key industries during the colonial period. Mumbai`s textile industry became the backbone of India`s industrial revolution in the 19th century.