Just a few yards inland from a tired, lonely beach on the southern coastline of India, a modest monument stands in honour of a landing that took place some 500 years ago and which changed the world. The inelegant, unwashed piece of stone marks the disembarkation of the Portuguese explorer Vasco da Gama on the shores of Calicut in 1498. The words on the monument are pithy, almost to the point of rudeness. The plaque itself is sandwiched by a couple of old posters that nobody has bothered to scrape off. There is no air of celebration, no serious commemoration.

Yet the landing of da Gama was an event of monumental importance. It was by no means the first contact between the peoples of Europe and India. There had been plenty of exchanges along the silk route between east and west, which had led to settlements of European traders in the Indian sub-continent. But the fall of Constantinople to the Ottomans in 1453 effectively blockaded the eastern Mediterranean, and the supply of spices on which the west depended for preservation of food - pepper was worth more than its weight in gold in the 15th century - suddenly dried up.

Da Gama took up the challenge of finding a direct route to reopen the supply. He sailed from Lisbon, around the Cape of Good Hope, and was lucky enough to find a Gujarati navigator who led his ships to India with the aid of the monsoon winds. The first man ashore from the Portuguese delegation was a convict, chosen to bear the risk of this appointment with the unknown. The first person he encountered was not an Indian but a Tunisian Muslim, who spoke Castilian or Genoese. The convict addressed him with a pithy statement of intent -"We come in search of Christians and spices" - that denoted the religious and commercial impulses behind da Gama's expedition.

The Europeans found their spices, in abundance; they did not find the Christian king, the so-called"Prester John", whose existence had long been asserted in numerous medieval myths. But what da Gama and his soldiers also encountered was a highly sophisticated society, already busy trading with other Asian kingdoms, with its own socio-economic values, and with an expertise in certain manufacturing techniques that would make it a vital trading partner with the west. Here was the true opening up of the Orient; the very beginning, if you like, of globalisation.

There may be no festive airs in Calicut, but it's a different matter in South Kensington. Later this month, the Victoria & Albert Museum's major exhibition of the year will use da Gama's landing as the springboard for celebrating the first 300 years of cultural encounters between east and west."Encounters: The Meeting of Asia and Europe 1500-1800" will trace the way in which that initial frosty exchange between an ingenuous jailbird and a multilingual traveller blossomed into a rich and vital relationship that is still much on our minds today.

Amin Jaffer, the exhibition's co-curator, says the period was chosen precisely for its sense of fluidity and mutual exchange."It really was a great age of cultural fusion," he says, adding that the period immediately after 1800 marked a shift towards a more exploitative relationship between a powerful west and a vanquished east."There was without question a mutual fascination, and a great level of excitement on both sides."

Not that it was evident from the start. Da Gama, says Jaffer, was clearly not expecting to employ his diplomatic skills, as evidenced by the paltry nature of his gifts: 12 pieces of striped cloth, six hats, four strings of coral, a case of sugar, two casks of oil and two of honey. The local rulers were deeply unimpressed."When Vasco says to the king of Calicut that he comes from the greatest king in Christendom, he is not believed. He is thought to be an impostor or a simple merchant. They only begin to take him seriously when he begins to use some serious firepower."

Da Gama himself was doubtlessly confused as he explored the local terrain: he mistook Hindus for Christians, thinking the various depictions of female goddesses with the child Krishna were versions of the Madonna and child, and that temples were churches. He also had a more material shock, coming across fabrics such as cotton and silk, which suddenly made the rudimentary woollen garments of his native Europe appear crude and impractical."This was truly revolutionary," says Jaffer. The Indian mastery of printing and painting with fast dyes on cotton suddenly made it possible to provide cheap and attractive materials for the lower levels of European society. It also encouraged the wearing of underwear, prompting a hygiene revolution as well as an aesthetic one.

In the meantime, the noble classes became bewitched by objects that were ordinary in Asia, but which suddenly acquired a fashionable sheen of exoticism when wrenched out of their usual context. Jaffer points to one of the show's exhibits, a coconut shell extravagantly mounted in precious metal."This is something that would have just rotted on a beach somewhere in Asia, but here it is mounted in silver gilt, and surrounded by an oak tree, taking the exotic and making it domestic." He also shows me a rock crystal bangle from Sri Lanka, which might have been owned by Queen Elizabeth I.

Jaffer says the concept of exoticism - the term was first used in English by Ben Jonson in his Cynthia's Revels of 1601 - went on to play a key role in east-west relations. By appropriating the exotic, by extracting and consuming elements of it, both sides could claim emblematic power over the other: Jaffer cites the example of the Yongzheng emperor of China, who depicted himself in European dress not because he wanted to be seen as European, nor for fun, but because he wanted to make a point about China's universal sovereignty.