The Company had first set up its trading activities in the well-established port of Surat on the west coast. Subsequently, the search for textiles brought British merchants to the east coast. In 1639 they constructed a trading post in Madraspatnam.  This settlement was locally known as Chenapattanam. The company had purchased the right of settlement from the local Telugu Lords,  The Nayaks of Kalahasti, who were eager to support trading activities in the region. Rivalry with the French East India Company led the British to fortify Madras and give their representatives increased political and administrative functions. With the defeat of the French in 1761, Madras became more secure and began to grow into an important commercial town. It was here that the superiority of the British and the subordinate position of the Indian merchants was most apparent. Fort St George became the nucleus of the White Town where most of the Europeans lived. Walls and bastions made this a distinct enclave.

Why did the Nayaks of Kalahasti sell the right of settlement to the East India Company in the 19th Century?

They were eager to support trading activities in the region.

The correct answer is Option 2 - They were eager to support trading activities in the region.

As per the passage:

The Company had first set up its trading activities in the well-established port of Surat on the west coast. Subsequently, the search for textiles brought British merchants to the east coast. In 1639 they constructed a trading post in Madraspatnam.  This settlement was locally known as Chenapattanam. The company had purchased the right of settlement from the local Telugu Lords,  The Nayaks of Kalahasti, who were eager to support trading activities in the region.