"India is at the peak of attractiveness for retailers right now with a 350-billion-dollar retail market expected to grow 13 percent this year," says Fadi Farra, who headed the study by global consultancy AT Kearney.
The annual study ranks India in top spot followed by Russia in second place, Vietnam third, Ukraine fourth and China fifth, down one spot from last year.
"The Indian retail market is gradually but surely opening up while China's market becomes increasingly saturated," a trend fuelled by international retailers, says Farra.
The study released late last week rates nations on such factors as market saturation, political risk and economic growth.
Besides having a population of over one billion, a fast-expanding middle class and a strongly growing economy, India's retail sector is deeply fragmented, dominated by the "unorganised sector" -- small family-run stores.
"Organised" large-scale retailers account for two to three percent of the sector compared to 20 percent in nations