"When the hippies first came to India in the 1960s, people got very upset," says the 82-year-old architect Charles Correa. He is standing in the art deco surrounds of the RIBA in Portland Place – an institution that has declared him "India's greatest architect" – where a retrospective of his life's work opens this week.

"The rich Indian, driving his new Mercedes, just couldn't understand why a white person would be sitting in the road with lice in his hair. A friend of mine used to say that the hippy is sending us a signal: 'I am coming from where you are going,' he is saying. 'And it's not worth going there.'"

It is a fable that neatly sums up Correa's own journey. Trained in the US in the early 1950s, on a monotonous diet of Mies van der Rohe, he glimpsed the future and decided it wasn't for him. Instead, he returned home and has since built a body of work grown out of a deep understanding of his country's vernacular. As the simple product of climate, landscape and local techniques, his buildings have always stood out against many of his contemporaries' pursuit of exotic western forms – which continue to erupt across India's booming cities.

"We have all come too far away from the fundamentals," says Correa. "We have surrendered more and more to engineers, who manage to prop up any design and manage to heat and cool any kind of shape. Ultimately we are the losers: everything has left architecture, except whimsy and fashion."

He points his walking stick at a photograph of Mumbai's skyline on the wall, choked with a glassy forest of "idiot buildings", with a huddle of squatters and their tents in the foreground. "It is a city they can never afford," he says, "made of images that are never going to satisfy them."

Across the other side of the room lies one of his solutions. Developed in the 1970s and 80s, the Belapur incremental housing project was a proposal for mass affordable housing in New Bombay (Navi Mumbai), which demonstrated how high densities could be achieved with low-rise courtyard homes, built with simple materials at a human scale. Based on clusters of between seven and 12 pairs of houses arranged around communal courtyards, the buildings did not share party walls – allowing each family to extend and adapt their own house independently.

Housing in Belapur, designed around shared courtyards Photograph: Charles Correa Associates

"Making housing is like a bird building its nest," says Correa. "You start with a basic house, but you have to let people change it to their own needs."

In Belapur he has been taken at his word: the district is now barely recognisable, with many of his buildings demolished and replaced with much bigger concrete houses by the aspiring middle classes – an evolution that would have made an interesting addition to the exhibition. Yet the courtyards and the hierarchy of community spaces remains intact: it is a strong piece of city-making that has lasted beyond the individual dwellings.

This careful sequencing of what Correa calls "open-to-sky spaces" defines much of his work, from the scale of individual houses to rambling cultural complexes. The National Crafts Museum in New Delhi (1975–90) is arranged as a mat of interconnected spaces linked by courtyards, through which visitors makes their own route, as though exploring the streets or squares of a village. It is designed around the idea, Correa says, of "experiencing architecture not as an object one looks at, but as an energy field one moves through."

Similarly, the memorial for the Ghandi Ashram in Ahmedabad (1958–63) is a cluster of single-storey buildings organised as a labyrinth of courts and shaded walkways, positive and negative spaces traversed by an ambling route. Correa describes these meandering pathways, which occur throughout his buildings, as a "universal impulse" with deep sacred routes, common to all religions. From the pradakshina encircling the Buddhist stupa, to the garbha griha in Hinduism, to the processional route around the Kabba in Mecca and the ambulatories of Europe's great cathedrals: "It is a ritual that seems basic to all humankind."

A high courtyard in the Kanchanjunga apartments, Mumbai. Photograph: Charles Correa Associates

For, while his housing projects are fundamentally directed by pragmatic climatic design – such as the groundbreaking Kanchanjunga apartment tower in Mumbai (1970–83), with its stacked verandas angled to catch the breeze – many of his institutional and cultural projects appear to be driven instead by an overriding cosmic order.

Correa describes how his cultural centre in Jaipur, the Jawahar Kala Kendra, is based on the concept of the Navagraha, the mandala of nine planets fundamental to Hindu astrology. An early sketch next to an enigmatic wooden model shows how the grid of nine planetary squares houses the galleries, theatres, museums and auditoriums, with the corner square mysteriously rotated to create an entrance.

"Every society has seen architecture as something that transcends its functional role, as a diagram of the cosmos," he says. "But now we have become too mundane about what we build; we can make things that are whimsical, but not profound."

One unusual model in the gallery upstairs shows when he himself strayed from his own principles in a temporary project for an industrial trade fair in 1961. The faceted concrete planes of the Hindustan Lever pavilion look like a crumpled sheet of card, foreshadowing the work of deconstructivist architects by more than two decades. But it was not an avenue he was keen to pursue. "This way lies madness," he grins, tapping the wonky wooden model. "It's like writing Finnegans Wake: Joyce lost his audience, and then he lost himself. The more you do things like this, the more they are the same. I'm glad I stopped."

For Correa, successful buildings must be tied to their context above all. "Architecture is not a moveable feast, like music," he says. "You can give the same concert in three different places, but you can't just repeat buildings and clone them across the world."

Unlike many of his generation, he refuses to "get off a plane and design", and, while he has built experimental housing projects in Peru and a biomedical research centre in Lisbon, he refuses to describe himself as an international architect. Nor does he see his buildings and the 6,000 drawings he has donated to the RIBA archive – half a century of work – as anything more than "the trail that a snail leaves in its wake as it inches forward."

As for his lasting influence back in his home country, he simply laughs: "No one could have a lasting influence in India – it is far too big."

• Charles Correa: India's Greatest Architect is at the RIBA, London W1, Tuesday to 4 September