Answer & Solution
Yanam lies on the banks of the Godavari River and is situated in the East Godavari district region of Andhra Pradesh. Its geographical location makes it unique, as it is separate from the other districts of Puducherry — namely, Puducherry, Karaikal, and Mahe — which are themselves located in or around different states.
The other options are incorrect:
Tamil Nadu surrounds Puducherry and Karaikal districts, not Yanam.
Kerala surrounds the Mahe district.
Karnataka does not border any district of Puducherry.
Therefore, the Yanam district is surrounded by the state of Andhra Pradesh.