What did Cunningham believe marked the 'beginning of the Indian history'?

The development of the first cities in the Ganga Valley

The correct answer is Option 2 - The development of the first cities in the Ganga Valley

Alexander Cunningham, like many others, thought that Indian history began with the first cities in the Ganga valley.

When Cunningham, the first Director-General of the ASI, began archaeological excavations in the mid-nineteenth century, archaeologists preferred to use the written word (texts and inscriptions) as a guide to investigations. In fact, Cunningham’s main interest was in the archaeology of the Early Historic (c. sixth-century BCE-fourth century CE) and later periods. He used the accounts left by Chinese Buddhist pilgrims who had visited the subcontinent between the fourth and seventh centuries CE to locate early settlements. Cunningham also collected, documented and translated inscriptions found during his surveys. When he excavated sites he tended to recover artefacts that he thought had cultural value. A site like Harappa, which was not part of the itinerary of the Chinese pilgrims and was not known as an Early Historic city, did not fit very neatly within his framework of investigation. So, although Harappan artefacts were found fairly often during the nineteenth century and some of these reached Cunningham, he did not realise how old these were.

A Harappan seal was given to Cunningham by an Englishman. He noted the object, but unsuccessfully tried to place it within the time-frame with which he was familiar. This was because he, like many others, thought that Indian history began with the first cities in the Ganga valley. Given his specific focus, it is not surprising that he missed the significance of Harappa.