You can pick up handicrafts from all over the country from various state government emporiums. They stock a large range of arts and crafts ranging from sandalwood carvings and bronze figurines to Kashmiri papier-mache and miniature paintings. Prices are fixed a little higher than you'd pay in a bazaar but if you don't know the going rates for crafts, these places are a safe bet.
The labyrinthine World Trade Centre Arcade near Cuffe Parade houses the Gujarat, Himachal Pradesh, Jammu & Kashmir and Madhya Pradesh government emporiums. The Uttar Pradesh Handicrafts and Kashmir Government Arts emporiums are on Sir P Mehta Rd in the Fort.
In Mumbai's retail stores, you'll find interesting cotton dhurries (rugs), Maharashtrian brasswork, blackwood furniture, Rajasthani dolls, block-printed bedcovers and hand-made, environmentally friendly paper. Keep your eyes peeled for textiles decorated with the distinctive Warli tribal designs.
Dubious handicrafts can be picked up from stalls lining Colaba Causeway; better stuff is available at the Kala Ghoda Fair held on K Dubash Marg. The Oberoi Shopping Centre, at The Oberoi hotel, and the conglomeration of expensive curio shops on Mereweather Rd behind the Taj Mahal Hotel.
Central Cottage Industries Emporium has the biggest selection of mass produced trinkets and handicrafts, and a large range of textiles from allover the country. Although most of the artifacts are fairly naff, it's a convenient place to purchase compulsory gifts.
Chimanlals sells beautifully designed handcrafted paper products decorated with Indian motifs and ethnic designs. They include stationery, cards and gift boxes.