Cradling her baby, Oliver, Alison, 31, happily strokes his head, holds his hands and feeds him from a bottle, like any proud new mother. But for the Australian primary-school teacher and her 35-year-old British husband, William, the birth of their son has followed a long and desperate medical struggle in which both had almost given up hope of having a child.

William and Alison live in London, but Oliver was born here, in Anand, Gujarat, in a clinic filled with barefoot women in flowing saris, in a remote rural community in India. It was an unusual entry into the world, but Oliver’s entire conception had been far from ordinary. The tiny boy, born five weeks prematurely, was conceived through an egg donor and in-vitro fertilisation; he was carried by an Indian surrogate mother whom his parents had met just two days before his birth.

Oliver was born to a woman from Anand, a small town at the forefront of India’s booming reproductive tourism market, where foreign couples flock for infertility treatments. The chaotic, dusty backwater, where rickshaws, cows and street vendors swirl around each other in the punishing midday sun, has earned the nickname “the cradle of the world”.

Since 2003, 167 surrogate mothers have successfully given birth to 216 babies at the Akanksha Infertility Clinic, run by Dr Nayana Patel and her husband, Hitesh.

Around 50 surrogates are pregnant currently, making Anand one of the biggest surrogacy hubs in Asia. For Alison, the clinic offered a last hope after IVF failed. “I didn’t have any eggs,” she says, “so my sister was my donor. We had five attempts at IVF — three failures, a miscarriage and an ectopic pregnancy. We were told to give up.”

“Our doctor at the time suggested surrogacy, but I dismissed it,” says William. “We would need an egg donor and a surrogate mother, so I was resigned to a life without children — although you never give up hope.”

Alison first contacted Dr Patel, a glamorous woman in her late forties, in August 2008, and the couple flew from their London home to India in January last year to begin the first round of treatment. Although their arrival in the developing country was a culture shock, they say: “The technology is really good, the expertise is first-class, and the customer service is excellent.” They paid around £14,300 for the surrogacy package, of which between £4,250 and £4,900 would go to the surrogate mother. Volunteer surrogates receive £30 a month up to delivery, plus £390 at three and six months, and the whole amount at delivery, regardless of the outcome.

Usually, in the first stage of surrogacy, the wife’s ovaries are stimulated to produce eggs through hormone treatment. After 9 to 11 days of hormone injections, the eggs are extracted and fertilised with the husband’s sperm. Two days later, if all goes according to plan, some of the resulting embryos will be implanted in a surrogate mother. In Alison’s case, the eggs were retrieved from an anonymous donor — the couple were told only that she was 26, and were given a detailed report of her medical history. The donor would have received around £150-£250 for this uncomfortable procedure which can cause side effects similar to those of the menopause such as hot flushes and night sweats.

After the embryos are implanted, there is a two-week wait to find if any have resulted in a pregnancy. According to the UK Human Fertilisation and Embryology Authority, the live birth rate for IVF is just 20% per treatment cycle, so it was a disappointment, but not a total shock, when the first surrogate mother lost the baby at eight weeks. As embryos had already been created and frozen, Alison and William did not return to India for the next two attempts at implantation. Their successful surrogate mother was 35 and, according to clinic rules, was married, a mother herself with a good obstetric history. “You get lots of updates, month to month,” says Alison. “There are the scans, and they do a baby shower for the surrogate mother in the seventh month. It’s sort of like a blessing of safe passage.”

When news came that Oliver would be premature, the couple rushed to be present for the birth. “We all went together for a scan. It was exciting,” says Alison. “Meeting the surrogate mother for the first time was quite unnerving. Because we don’t speak Gujarati, I think we spent most of the time smiling and nodding and trying to have a very basic conversation.”

The birth was quick after Oliver lodged himself in a breach position and a caesarean was performed. The first time she held him, about three minutes later, Alison was terrified. “He was having some breathing difficulties at the time. The paediatrician was here, rushed him to hospital, and I didn’t get to hold him again for another two or three days because he was on oxygen and being tube-fed. So it felt strange. The first experience was very nerve-racking, but after that it was really nice to finally get to hold him.”

The surrogate mother visited Oliver while he was in the intensive-care unit, and nursed him with her own breast milk. “You seem to develop a way of communicating,” says Alison, adding that the moment of the final handover went more easily than expected. “I think she knew the reason why we were doing this, and she was prepared for the fact that he was coming home with us. She’d come and say hello and hold him for a little while, but she did seem to keep a little distance. I think she needed to do that to help herself, because it could be really hard to carry the baby for eight or nine months and then say goodbye.” Alison and William promised to stay in touch with her. “We’d like to send a Christmas card and photos to show her how he is growing up, and if we came back here we would like to meet up with her.”

The story of how the surrogacy industry has boomed in Anand, also known as India’s “milk capital”, began in 2003 when Dr Patel arranged for surrogacy by a 44-year-old local woman, who wanted to lend her womb to her childless UK-based daughter. When the woman gave birth to test-tube twins — her own genetic grandchildren — it made headline news. Patel began to receive requests for surrogacy from India and abroad, and scores of local women signed up.

The 50 pregnant women at the clinic are mainly of lower caste and from impoverished nearby villages. The pay they can hope to receive following a birth is equivalent to over 10 years’ salary for rural Indians. At face value, the deal seems like a win-win situation. Childless couples receive a longed-for baby, while poverty-stricken women can finally buy a home or afford a good education for their own children, raising their status in India’s paternalistic rural communities. But is it really an equitable relationship, or an example of westerners exploiting the world’s poorest women by paying a fraction of the price that they would closer to home for what, at its most basic, is a womb for rent?

By some estimates, Indian surrogacy is already a £290m-a-year business. While the Akanksha clinic is transparent about treatments and charges, India has few laws to regulate surrogacy, which opens the door for unscrupulous agents to exploit both the surrogate mothers and desperate couples. If it is poverty that compels the women to put their bodies through the physical and emotional stress of pregnancy, how can this be fully their choice?

The ethics of hiring a poor woman to carry their child was something Alison and William thought through carefully. “It’s a difficult issue and everyone has to form their own opinion,” says Alison. “Obviously, the lady has to give up her life and body for nine months. Our surrogate’s children were much older, but I wouldn’t have been 100% happy if she’d had a three-year-old she had to leave behind.”

“If I’d had a child by normal means, then I would probably think it was exploitation,” says William. “But I don’t personally feel bad. These women are all adults and they know what they’re doing. The reason is mainly financial, and it gives them a chance to improve their lives. Are they being exploited? I don’t think so. I do feel very sorry for the people here. Even the waiter in our hotel gets £200 a month, and you look at it and it just doesn’t seem fair. It’s the luck of the draw really, but can we solve the problems of the world?”

“It is hard,” continues Alison, “because obviously people who know us and our situation understand that this was our one opportunity, and we jumped at it. Whereas people who don’t know the struggle we’ve been through might think, well, why have you done this?”

They don’t want to appear ungrateful, but some surrogate mothers admit that they would not take the risk if they had a choice. “My husband took almost two months to convince me to do it,” says Anandi, a 39-year-old about to give birth for an American couple. “He said, ‘Do it for your children.’ But I have very young children and I was worried about leaving them.

“I will feel sad when I give away the child. I don’t know if I will be allowed to have contact with it. My children want me to give the baby away; they don’t want it at home. Nobody else knows about this. The village people would say bad things. I’ve just said that I’ve gone away for work, and I haven’t even told many of my relatives, only a few. They wouldn’t understand.”

Anandi had just moved from one of two “confinement” homes, where surrogate mothers live for the duration of their pregnancies. They may leave the gated premises only for hospital check-ups, and their husbands and children are allowed to visit on Sundays. This is to protect the baby, explains Hitesh Patel. “If they stay at home, we don’t know what they’re doing. They might be working. Are they eating a balanced diet and taking proper rest?” The surrogates also enjoy staying at the homes, he maintains. “For the women it’s like a paid holiday.”

The laid-back atmosphere in both homes would appear to support his claim. They have very basic facilities, peeling walls and sparse furniture. The women sleep in single beds, three to a tightly packed room. There are small shrines for prayers and a TV for entertainment, although with only plastic chairs or the floor to sit on. Posters of Jesus, the Hindu god Ganesha and babies adorn the walls. This may sound far from luxurious, until you compare it with their own mud homes, many of which lack basic bathroom facilities. And while, at home, they wait hand and foot on their families, here they float around in colourful gowns, chatting, reading or sleeping, appearing content. Their confinement also provides them with an escape from the questioning glances of curious neighbours who would regard their growing bellies as shameful.

Pushpa, a 33-year-old mother of three, is five months pregnant with her second surrogate baby. Her first, a girl called Sivi destined for an Indian couple from Benares, paid for an outdoor latrine and plastering of her family’s two-room village hut. The two surrogacies will pay for the education of her children. The eldest, Hirem, 15, wants to be an IT software engineer, and her middle daughter, Hina, 13, wants to be a teacher — professions that will pull both children out of a generations-long cycle of poverty.

“I’m very proud that my three children are studying well. I want them to become whatever they want to be,” says Pushpa.

Her 47-year-old husband, Francis, who initially talked her into the idea, is equally proud of his wife. “I earn 100 rupees [£1.46] a day in a local factory. My wife is now earning much better than me,” he says with a wide smile.

Pushpa, however, is still dealing with the consequences of her sacrifice. She gave her first surrogate daughter away in December 2008 after a caesarean birth and longs to see her. Her husband, who was present at the handover, recalls Pushpa’s tears, and how the baby’s tiny hand clutched her blouse.

“I was nursing her in the hospital for 10 days and the couple visited her every day,” Pushpa says. “They call every 15 days. If the baby is crying or laughing, then they put the telephone next to her so that I can hear. I have the same love for the child in Benares that I have for my own children. I feel like crying when I hear the child’s voice — it makes me feel bad. But I would never tell them that I want to meet the child, as she is theirs. I gave her away and I won’t force them.”

Pushpa is clearly missing her own children. Although they can visit her every Sunday, the eldest two are caught up in revising for exams. Hina is now in charge of the household and must take care of the cooking and chores.

Sumita, aged 32, is in the sixth month of her first surrogacy, and she too is nervous about handing the baby over. As she speaks, her five-year-old daughter, Janisha, clings to her hand and her gown. Janisha has become more withdrawn and has lost weight since her mother left the family home.

“I decided to do this for the education of my children,” Sumita explains. “I am currently spending 500 rupees [£7.32] a month to send them to a government school, but I want to send them to a private school. It costs 1,000-1,500 rupees a month for a good Christian school. I met the couple and it felt good. They were from Mumbai and were nice to me. They told me they would allow me to talk to the child and would keep in touch. I am very happy about that.”

If the first surrogacy is successful, Sumita would consider another. But 10 minutes later, it is time for Janisha to leave. In dread of another separation, she wails and grips Sumita’s bedcovers, before tearing away and running round in heartbreaking distress. Her anguish shatters any illusion that to be a surrogate mother is simply a way to make easy money.

Kokila, 36, another surrogate mother, speaks of the fear she felt when she found out she was carrying triplets. Now she faces the prospect of having one of the triplets aborted to give the other two a better chance of survival.

For prospective parents, 50-60% of whom are American and 10% British, the entire process is also fraught with difficulties. Thousands of miles from home, the language barriers, culture shock and basic standards of a Third World clinic, where two women are often in the operating theatre at the same time, can make for a frightening experience. Failed surrogacies are frequent, and the Brits who successfully produce a baby face a two- to three-month stay while the British High Commission sorts out the paperwork. For American couples the wait is around 10 days.

The hazy regulation of such an ethical minefield has led to calls for India to introduce tight laws on surrogacy to protect both the mothers and the couples. New legislation has been drafted, detailing the obligations and rights of all parties, but it has yet to be enacted.

According to Priya Hingorani, a prominent Delhi lawyer and member of an expert panel drafting the bill, tight regulations must be enforced to offer the surrogate mother a comprehensive package of remuneration and medical and psychological care. “When I look at the poverty, and the genuine need of the couple who don’t have children, I think that surrogacy is all right,” she says. “But when I see the other side of things, when people are exploited, then there is the need for very strong regulation. Surrogacy has become more of a commercial racket as it becomes more prevalent. We are seeing a new trend of fertility and wombs on sale.”

Dr Patel, who says she works 10 to 14 hours a day, six days a week, agrees that laws need to be introduced to protect surrogates, to insure hospitals and to control unscrupulous agents. But she fiercely denies any charge that poor women are exploited. “People abroad think Indian women are pushed into surrogacy, but it’s not like that,” she insists. “It has to be voluntary. It’s very empowering for women in the family. It really is a satisfying job when you hear a happy couple and a surrogate saying ‘My life has changed.’”

Alison and William say they looked at all the options available to them in the West, including adoption, but they were stymied by red tape and other obstacles. In Britain, surrogates are difficult to find because the Human Fertilisation and Embryology Act 1990 stipulates that a woman can be paid only “expenses reasonably incurred”. Since the Act extends to payments made abroad, lawyers are predicting that couples who pursue surrogacy overseas may risk not being recognised as their child’s true parents if they pay too large a fee.

Raymond and Samantha, a businessman and a doctor from Birmingham, arrived in Anand a month ago for their first round of treatment. Although the couple are fertile, Samantha has a spinal condition that means she could be paralysed in the final stages of pregnancy. Adopting a child could have cost up to £20,000 and would have denied them the possibility of having a newborn baby. After Samantha’s father saw Dr Patel on The Oprah Winfrey Show, the couple began to consider the option of surrogacy in India and decided to give the procedure just one try. “This child would be biologically and genetically ours,” Samantha says, “but we shouldn’t have to go to the other side of the world to make a child when this could happen two miles down the road.”

The surrogacy process began when four healthy embryos were transferred to a young woman. Shortly after our interview, Samantha and Raymond received the thrilling news that she was pregnant, possibly with twins. The couple, both devout Christians, say they initially struggled with the ethics of surrogacy, but were reassured after spending time at the clinic.

“The surrogate mothers all looked relaxed and happy,” says Raymond. “If it works, it’s a brilliant situation for everybody. We get a child and they get an astronomical amount of money. When I asked our surrogate mother what she wanted to do with the money, she said she was going to put her three-year-old son through school. You could tell she really wanted it to work. She said, ‘I’ll look after your baby.’

“We’d be disappointed if it didn’t work, but we wouldn’t be angry at the world. It would be different if we had a child and knew what we were missing. Being here helps me to keep perspective. I see a man picking up plastic from the street, and I know that I have other things to look forward to. We’re healthy and we have each other. Nobody has a divine right to a child.”