I take it you are an expat in Mumbai. Is the niece in Mumbai? I know that when I lived abroad, I started to take the local items for granted. Some things were so ubiquitous that when it came time to bring home gifts, I overlooked them. Now that I've been home, I wish I'd gotten tons of those things. You might be surprised what would be appreciated back home even if it's a dime a dozen (literally and figuratively) in Mumbai. Sorry I can't be more specific, but I don't know the local products in India.
The items don't necessarily have to be age-appropriate either. For example, in the city I lived in in China, there was a kite-maker who was pretty well known. I got my 2yo niece a butterfly kite. Her parents said it was too beautiful to fly, so they designed her entire room around it. It still hangs in her room.