Step 1: Check the Assertion on its own.
In the sixteenth century the Indian Ocean was full of trading ships, and India sat right at the centre of this network, exporting cotton, spices and other goods to distant markets. So the Assertion holds up.
Step 2: Check the Reason on its own.
India's location between East Asia, West Asia and Europe meant that ships travelling between these regions naturally passed through Indian ports. This is a true statement too.
Step 3: See if the Reason actually explains the Assertion.
The reason India could become such an important trading hub was precisely because of this in between location. So the Reason is not just true, it directly explains why the Assertion is true.
Hence, both statements are true and the Reason correctly explains the Assertion, so the answer is option (A).