Competition eventually ruined the pashmina market.
So he went to Dubai and got into diamond trading.
"I was always interested in diamonds," he says. "I had even done a small course in diamonds. I'm still passionate about that business."
In 2009, on their first wedding anniversary, Kundra gifted Shetty a flat on the 19th floor of the world's tallest building, the Burj Khalifa in Dubai.
In the same year, on her birthday, Kundra bought her a two-bedroom flat worth Rs 7 crore in central London.
The couple also has a seven-bedroom "Raj Mahal" in St George's Hill, Surrey, where their neighbours include Cliff Richards and Elton John.
This mansion was bought for Kundra's first wife Kavita Kundra.
That first marriage lasted two years, and the couple had a daughter named Deleena.
"I've only seen her the first 30 days of her life," says Kundra, adding that this fact is a "stone in my heart".
The divorce court awarded custody to the child's mother, while allowing Kundra to meet Deleena once a week. But he refrained from meeting her.
"Kavita and I had a dirty divorce and we never saw eye-to-eye after that. I had to move on."
Also, he says, he didn't want to confuse the child about being in "her life and yet not being in her life".
Image: Raj Kundra and Shilpa with Yusuf Pathan.
Image Courtesy: Raj Kundra