Explanation:

- Lothal was a significant city in the ancient Indus Valley Civilization, known for its advanced urban planning and maritime trade.

- The site is renowned for its dockyard, believed to be one of the world's earliest known, indicating extensive trade links.

- Option: 1, Gujarat - Correct Answer: Lothal is located in the state of Gujarat. It stands as an exemplary site of engineering and commerce from the Indus Valley times.

- Option: 2, Himachal Pradesh - Incorrect: This state is not linked with Lothal.

- Option: 3, Rajasthan - Incorrect: Rajasthan does have Indus Valley sites, but Lothal is not one of them.

- Option: 4, Punjab - Incorrect: While Punjab was a part of the Indus Valley Civilization, Lothal is situated in Gujarat.