Bargaining is a very important, and even expected, part of shopping at markets in India. Here's the best way to go about it to make sure you don't pay too much at India's markets.
To get a feel for how much goods should cost, visit some fixed price stores first.
In street markets, as a general rule, don't pay more than half the initial asking price of any items. Sometimes it's possible to pay less, especially if you buy more than one item.
Shop keepers consider the first sale of the day to be lucky, so shop early and they may give you a better price to get your business.
Never reveal how much you're interested in an item. Always pretend to be indifferent as to how much you want it.
Start the bargaining process by asking the shop keeper "Is this your best price?" or "Is a discount possible?".
The price will immediately be dropped a small amount. Tell the shop keeper that the item is still way too expensive. You'll then be asked how much you're prepared to pay.
When it's your turn to offer a price, make sure you start with a low amount that's well below what you're prepared to pay. Around one third of the quoted price is a good amount.
If the shop keeper isn't dropping the price enough, walk away. Usually this will result in an immediate reduction in the asking price. If it doesn't, it's an indication that your price is too low. You can either go back and keep negotiating, or try and find the item cheaper somewhere else.
It's a good idea to walk around the market and see all that's on offer first, before buying anything. It's common to find the same items for sale in a number of shops.
Lastly, keep in mind that bargaining is meant to be fun. Many shop keepers enjoy it, as the interaction breaks up the monotony of their day.