David Housego's first trip to India might easily have been his last when, as a student, his overland hitch to Bengal via Pakistan turned into a tour of the sub-continent's nursing homes thanks to a ferocious bout of dysentery. As unromantic as it was painful, the three-month odyssey was the start of Housego's life-long love affair with the country.

The decision to move permanently to India was made for him in 1988 when the Financial Times sent him to Delhi as their Asia correspondent. The Housegos imagined the transition would be simple enough. After stints in Paris and Iran, they thought they'd slip easily into ex-pat life. "I'd been over a few times," says Jenny, a textile historian. "And we'd spent two winters in India with the children, and I felt at home."

However, in keeping with the tradition laid down by David years earlier, all the Housegos fell sick within weeks of their arrival. "We were incredibly ill with Denge fever. It laid us absolutely flat. I was trying to find my feet, and not speaking the language, and having help which wasn't always as helpful as it might have been was extremely frustrating."

David recounts a catalogue of horror stories which would have had most people heading for the first plane home. "You're just giving the bad side," complains Jenny, although she does admit there were times when she wondered what they were doing there.

However, those doubts had long gone when, two years ago, their youngest son, Kim, was kidnapped while on a family holiday, trekking in Kashmir. "We were very shaken by it all," says David, "But it didn't affect our feelings for India. Leaving never occurred to us." If anything, the experience seems to have confirmed their commitment to the country.

"It's home now. Where would we have gone?" says Jenny. "Living in India is rather like being on quicksand," she says. "You believe that one day the sand will become solid, but it never does; instead you find that you have learned to move with it."

Unlike the initial leap from London to Delhi, the switch from journalism to business came easily for David; he describes it as a fortuitous coming together of ideas and events. "We had been in India for about four years and various plans began to go through our minds. I felt that I might like to leave the FT and Jenny was interested in setting up a development project of some sort. We both liked the idea of working in India." A hazy plan to use India's untapped traditional textile skills on upmarket products became a reality when the law regarding foreign ownership of Indian-based textile companies changed in their favour.

Shades of India was the result. Jenny had always thought it a pity that India's reputation for textiles was so bad. "It's thought of as cheap and cheerful," she says, "When actually the country has produced some of the very best textiles ever."

According to David, the current boom in the manufacture of western clothes in India is threatening traditional crafts. As he points out, you don't need embroidery skills to sew a pair of jeans together.

Although hoping to raise the profile of Indian craft, and preserve time- honoured techniques, the Housegos were determined to make the products as contemporary as possible. The design team, led by Jenny, include Stuart Robertson, an English painter based in India, and a French design consultant, Marie-Claude Berard. David's opinion is called in at the final stages of development.

"Whether it's paintings, the textiles we collect or something we are producing ourselves, David is brilliant at spotting what works. I get bogged down in all the art history. David has the eye and I have the knowledge."

It's a good combination. Although barely three years old, Shades of India's home textiles already grace the world's most exclusive department stores: Bergdorff Goodman and Takash-imaya in New York; Porthault in Paris; and Liberty and Joseph Maison and Conran in London. Their appliqueed and exquisitely embroidered bed-linen, tablecloths, curtains and mosquito nets are a sublime marriage of traditional Indian textile methods with contemporary designs and colours.

The latest collection in organdie, a fine translucent muslin, very little used in the West, has had buyers from homewares departments worldwide falling over themselves to place orders. "Everyone is trying to copy them," says Sarah Bryant, Liberty's textile buyer. "The key to the Housego's success is that their staff take real pride in their embroidery. They are using India for its good workmanship, not as a source of cheap labour." There's clearly a market for luxurious and beautifully made home textiles. Last summer Shades of India's organdie mosquito nets, pounds 275 each, walked out of Liberty the minute they arrived. "We couldn't keep up with the demand," says Sarah.

The Housegos started with one workshop in a Rajhastani village, and a finishing shop, laundry and offices in the heart of Delhi. Running an international business from India's capital is not easy.

"Often in the summer, there's only water for an hour a day, and we need a constant supply for our washers," says David. Nightly water deliveries for seven months of the year and 13,000 gallon storage tanks on the roof keep production on track; regular power-cuts which cut off all communication with customers and their scattered workforce are kept at bay with a generator.

Compared to the office in Delhi, with all its back-up systems, the first village workshop was very basic: a rented house situated at the foot of a little range of hills with its own walled courtyard. Jenny describes it as "absolute heaven".

When Jenny opened the court- yard gates on the first morning, 20 women were waiting. "I'd estimated that we had work for about five ladies, but we gave them cloth and sat them down." The next day 40 women stood at the gates, and on the third there were 60. They short-listed 20 on merit and it has grown from there.

A training programme runs in tandem with the workshop ensuring that when women marry and move away, other local girls are able to join. "Not that they need much training," says Jenny. "Their stitching is so good. It's in their blood. When the work involves new techniques, they learn fast and the quality is always superb."

David suspects that the workshop allows many of the women to escape from mothers, in-laws and husbands. "It's been a tremendous boost to the income of the village, and it's given the women more independence within their households. Everyone is delighted." So much so that a deputation arrived from a neighbouring village asking for a similar workshop.

The Housegos now have several workshops scattered across India. In Gujarat, the women produce incredible chain-stitch designs; and in Assam, the remote north eastern province, wool shawls are embroidered with scattered leaves in the area's trademark Kantha stitch." "Where possible, we use local methods from the areas the women come from," explains Jenny.

"If we gave this work to women in another area, the needlework would become thick and lumpy and they probably wouldn't have the same instinct for the way the design flows."

So what happens next? The Housegos aren't sure. "India is so huge and there are so many different techniques," says Jenny. She will spend he next year tracking down skills and techniques unknown in the West. In the meantime, you can see the Housegos' latest range of organdie at Liberty in London.

Other stockists:

Conran Shop, London (0171-589 7401)

Joseph Maison, London (0171-245 9493)

Jenners, Edinburgh (0131-225 2442)