Shenzhem, Mumbai Multinational retailers, still largely barred from India's fast-growing but chaotic industry, are pinning their hopes for now on China, where the investment climate is ripe for growth.

Both countries offer enormous promise to the world's biggest retailers, but the likes of Wal-Mart Stores, Metro and Carrefour reckon China will deliver the goods in the short term as they wait for India to open up its retail industry and embrace the western way of shopping.

Global leader Wal-Mart has opened 80 stores in China to grab a slice of the $892 billion retail market there. But in India, where modern retail, with its hypermarkets and one-stop shopping, has only a small share of a splintered $350 billion industry, US-based Wal-Mart has sparked political concerns and protests by traders and shopkeepers even before opening its first cash-and-carry store.

In the biggest demonstration yet against modern retail, more than 20,000 farmers and shopkeepers gathered in Mumbai earlier this month, chanting “It’s now or never, Wal-Mart quit India”.

“The $10 you put in China is going to give you a better return in the short term than the $10 you put in India,” said Wai-Chan Chan, leader of consultancy McKinsey's Greater China Consumer Practice. "Whatever happens in India, there are significant barriers to expansion. Mom-and-pop stores and people complaining about large retailers is one of them," he said. Nonetheless, India's promise is tantalising.

Its retail industry is forecast to nearly double by 2015, and it already tops AT Kearney's Global Retail Development Index as the most attractive market to be in. But while China opened the door to foreign investment in retail 15 years ago, protectionist India has dithered, and still limits foreign multiple-brand retailers such as Wal-Mart to wholesale or licence and franchise operations.

“Something can look very attractive and still be very hard to crack,” said Raman Mangalorkar, head of Greenbox Realty, a retail-focused real estate firm in Mumbai. “In some ways, the train has already left the station for foreign retailers in India,” he said.

India’s retail sector is dominated by small family-run shops, with modern retail making up under 4% of the market. In China, where retail is growing at about 10 percent a year and estimated to hit $1.3 trillion in five years, according to McKinsey, consumers are enthusiastic. Reuters