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Suddenly a broad smile broke out across his dark face. "Namaste!" he said, "Hello, greetings. You are welcome to be here and I am honoured to show you round."

We were an unusual party. Itxaso and I, Padam and Kantha, Gulfam and his friend - two Christians, two Hindus, and two Muslims, all with our different skills, cultures and lifestyles, but all working together and benefiting from trade. We still work together today, and all of us - seller, exporter, craftsman - rely on one another to make a living from fair trade. It's not just about money, however. Because our aim is not to exploit, but to work in harmony for the good of all involved, we develop relationships which go beyond just trade. We begin to see each other as people, and to respect each other's differences. We smile, we share jokes.

Suspicion, misunderstanding and prejudice between religions - even hatred - are common today. This affects politics and leads to human rights abuses, terrorism and wars. The aim of fair trade is not to deal with religious tension, but by bringing people together on the basis of mutual gain, it helps to reduce mistrust and tension, and to create positive feelings and relationships. This aspect of fair trade is often overlooked.

In business, too, fair trade sets a different agenda. The top priority in conventional business is to maximise profit, and if this means other people or the planet suffer, well then, so be it. Competitors are viewed with mistrust; it's a dog-eat-dog world.

But attitudes are changing, and this is due in no small part to the achievements of the fair trade movement. We have mobilised the public on our side, and in the 1990s, conventional businesses started responding to consumer demand. We're now at the stage where some business leaders are not just following the fashion, they really believe it's right to trade more ethically.

Fair trade is not a charity. We want everyone in the trading chain, from producer to consumer, to benefit. We often refer to our suppliers as partners; we even work together with our competitors in the fair trade movement, sharing information, ideas and even product designs. We try to emphasise the positive - what can we do together so we all gain? - it's like saying "You're hired" instead of "you're fired".

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An important aim of fair trade is to enable people to improve their living standards, so it's really gratifying when you visit someone who has moved from a slum to somewhere more permanent. I've seen this in Saharanpur, and I've seen it in Bali, where I've visited people who have built a new house as a result of our trade with them.

The most interesting house I've been to was owned by a craft producer in Kolkata. He made a living by making mobiles from scraps of old textile materials.

I had already surprised him, as I surprise many people in India, by saying I don't drink tea. Indians are always hospitable, and they are not prepared for this. "But you are Englishman!" they say.

As I sipped a glass of water, I received a surprise myself. I suddenly became aware that I was sitting next to what looked like a tree trunk. Not lying on the floor, but coming up through it and continuing upwards through the ceiling. I felt the bark. Yes, it really did feel like a tree.

"Is this a tree?" I asked, somewhat hesitatingly. I didn't want everyone to laugh at me.

"Oh yes, that's our coconut tree," replied the producer nonchalantly. From the way he said it, you would have thought it was the most natural thing in the world to have a coconut tree growing in your living room.

To prove his point he took me up to the roof. It was a flat one like many in India; they are used for cooking, growing plants in pots, hanging laundry to dry and so on. It was like a garden, with pots of herbs and vegetables - and the top of the coconut tree. I made a suitably admiring gesture, and a joke (which doubtless he had heard many times before) about not having to climb so far to harvest his crop. The family, apparently, had built the house around the tree. It was a valuable resource which they didn't want to destroy.

"You are all so generous, so nice to us," he continued. "You accept our goods when they are not up to standard, because you don't want us to lose out. But we want to increase our sales - we have thousands of skilled craftsmen who are out of work. How will we get into your high streets if we don't know what sort of quality your customers expect? Reject our goods if they are not up to standard! It will be better for us in the long run. We need to learn from you; we want our products to be of the best possible quality.

"That's not all," he went on. "What kind of image are we putting across when fair trade shops sell goods which aren't up to scratch, or when all the designs are out of date? It's not enough just to believe in what you are doing. We want you in Europe and America to be more professional, to market our products more effectively. We need more orders! Leaflets and campaigning are not enough! Fair trade food is booming - why are craft sales not booming too?"

Moon Sharma from Tara Projects in New Delhi agreed.

"If you hurt someone by taking their money, it has no value," she told me. "When I first came to Europe I thought it was heaven. Later I had a different perspective. In the West you have a different kind of poverty.

"I had a friend in Denmark who took me to see her mother, who was in a sheltered home. She visited her once each month. It was very nice, but it was a shock, because they all just seemed to be waiting to die. She wanted to be with her family. This was real poverty. My friend was giving money to Mother Theresa, but she hardly saw her mother at all. You need people to talk to and love; it's human relations that make you rich."

Moon is passionate about opposing child labour, and staff at Tara have risked their lives taking hidden cameras into workshops where children are employed, to expose them and publicise the issue of child exploitation.

The Indra Camp tuition school is one of many schools set up by Tara. It doesn't have walls or a roof. It consists of a concrete slab, a blackboard, a few books, the teachers and the children - who are often joined by adults too. Indra Camp is a slum where three hundred families live, one family to a room. There's no running water, and the communal taps only come on for an hour in the morning and evening. The electrical supply is haphazard.

Yet there's a great community spirit in the slum; you sense it when you visit the school, which Tara started in 1998. The children are mostly of primary school age, but teenagers and adults join in too, so in the same class you may see not just children of three, eight and fourteen, but women of thirty, fifty and seventy, all learning the same lesson. They sit on rush mats on the floor, reciting their A-B-Cs, in both Hindi and English. Their faces glow proudly when a visitor appears.

"It's wonderful to be able to write my own name," said Sarvari Begum, who came to Delhi from a village in the countryside, and was illiterate when she married at the age of eighteen. She was one of the first pupils at the school. Now her ten-year old son is doing well at the local state school and she has high hopes for his future.

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