Best are handloom products like saris and scarves. Delhi is well known for great scarves that are wool, pashmina, silk, and cotton.
Saris from specific regions are great but unless someone plans on wearing them, a bit useless.
Also, look for wood carvings and tapestries. Be aware of high prices given to tourists and be prepared to bargain (a lot!).
Good thing you told me about bargaining. Good to know what to expect :D