Step 1: Plan
We will place the four years on a time line and decide which event fits each point. Then we will check the options against that time line.
Step 2: Build the time line
1962 is the year of the war with China. 1965 is the year of the war with Pakistan. 1966 is the year after, when peace talks were held in Tashkent. 1968 is the year the NPT was opened for signature.
Step 3: Place the sure events
The Tashkent Agreement followed the 1965 war, so it is dated January 1966 and goes with (III). The NPT was opened in 1968, so it goes with (IV).
Step 4: Use the options to narrow down
Only options 2 and 3 have (B)-(IV). Both of them also say (D)-(III), so we need one more check to split them.
Step 5: Split the last two options
Option 2 says (A)-(I), (C)-(II). Option 3 says (A)-(II), (C)-(I). The Department of Defence Production was formed first, in 1962, right after the China war, and the Department of Defence Supplies came in 1965. So (C)-(I) and (A)-(II) hold.
Step 6: Conclude
Option 3 is the only one with every pair right.
Final Answer:
The events fall in the order Defence Production 1962, Defence Supplies 1965, Tashkent 1966, NPT 1968.
\[ \boxed{\text{Option 3}} \]