She recounted to a TV interviewer on Sunday that in the small town of Bamberg in South Carolina where her mother wore a saree and her father a turban, she would get teased in the playground.
But when she got home, her mother's advice was to stress to positives of her being an American.
Overcoming all odds, she became the Governor of her state in the southern part of the US, where there was deep-rooted racism, and went on to the cabinet.
She achieved these as a member of the Republican Party that is often criticised as being conservative and hostile to non-Whites, women and immigrants.
Haley is mentioned as a prospective presidential candidate.
One of her acts as Governor was to remove a racist symbol from the state's legislative complex - the flag of the American Confederacy, the group of southern states that rebelled against the abolition of slavery and fought the civil war to retain it.
The difference between the attitude ingrained by her Sikh family and that of some others of immigrant background surfaced when she was asked by the interviewer for her reaction to President Donald Trump telling four Congresswomen, who were immigrants or children of immigrants and critical of the US, to "go back and help fix the totally broken and crime-infested places from which they came".
While conceding the President's taunt was inappropriate, Haley said: "But I also can appreciate where he was coming from, from the standpoint of, don't bash America over and over and over again and not do something to try and fix it."
Growing up in the South as Nimrata Nikki Randhwa, she told the CBS interviewer about her encounter with racism. "We weren't white enough to be white, we weren't black enough to be black. We were the only Indian family (in town). My father wore a turban, he still does to this day."
In her book, "Can't Is Not an Option" published in 2012, she recounted that when she tried as a five-year-old to enter the segregated town's Miss Bamberger contests, she was turned away from the white section as not white and from the black section as not black.
She is known as a tough leader who fought to get what she wanted and it shone through her tenures as a state legislator, Governor and Permanent Representative at the UN.
She told the interviewer: "I think that, you know, you have to be tough. But I don't think you have to be disrespectful.
"I have always kicked with a smile. Yeah, I've always said I wear high-heels and it's not for a fashion statement. It's when I see something wrong, I'm going kick every time."
As for criticism that she is ambitious, Haley said: "You know, when women are referred to as ambitious, it's never in a positive light. I've heard that all my life: 'She's so ambitious.' No, I'm passionate. I love what I do. I throw myself into it.
"So, I prefer (to be called) 'badass'."
(Arul Louis can be contacted at arul.l@.in and followed on Twitter @arulouis)
( With inputs from IANS )