The correct answer is "1 only". Red Sanders, also known as Pterocarpus santalinus, is indeed a tree species found in South India, as stated in statement 1. This species is found specifically in the Seshachalam hill ranges around Tirupati in Andhra Pradesh, making statement 1 correct.

However, statement 2, suggesting that Red Sanders is one of the most important trees in the tropical rain forest areas of South India, is incorrect. While Red Sanders is valuable due to its rich red-coloured wood, it does not grow in the tropical rain forest areas but rather in the dry deciduous forest areas. They survive in areas with less rainfall and extreme temperatures.

To sum up, although Red Sanders is found in parts of South India, it is not considered a significant part of tropical rainforests, making statement 1 correct and statement 2 incorrect. Therefore, option 1 is the correct answer.