The correct answer is option 3: Both 1 and 2.

Explanation:

Option 1 is correct because during Akbar`s time, Mughal paintings were indeed mostly focused on book illustrations and portraits. Akbar was known for his patronage of the arts, and under his reign, Mughal paintings flourished.

Option 2 is also correct. Mir Sayyid Ali of Herat and Khwaja Abdus Samad were Persian artists who played a significant role in the development of Mughal painting. They brought their expertise in Persian and Islamic art, which fused with the indigenous Indian artistic traditions to create the Mughal School of painting. This fusion of non-Islamic and Islamic elements became a defining characteristic of Mughal paintings.

To summarize, Mughal paintings during Akbar`s time were primarily focused on book illustrations and portraits, and they were influenced by a fusion of non-Islamic and Islamic artistic elements brought by Persian artists like Mir Sayyid Ali and Khwaja Abdus Samad.