NEW YORK (CNN/Money) - India trumped both China and Russia to take the No. 1 spot in an annual list of top destinations for global retailers, including Wal-Mart and Home Depot, that are looking to expand overseas.

According to the international management consulting firm, A.T. Kearney's 2005 Global Retail Development Index (GRDI), India moved from second place to first in the latest index, displacing Russia, which had held the top spot since 2003.

The Index is a study of retail investment attractiveness among 30 emerging markets across the globe.

The report said India's improved investment climate due to more liberal rules for foreign direct investment (FDI) helped earn it the top spot this year.

India's retail market, which totals $330 billion, is vastly underserved and has grown by 10 percent on average over the past five years, the report said. At the same time, India is also one of the most fragmented retail markets in the world -- the combined market share of the top five retailers in India totals less than two percent.

"The message for retailers on India is clear: move now or forego prime locations and market positions that will become saturated quickly," said Mike Moriarty, A.T. Kearney vice president, in a statement. "Global retailers that missed opportunities to capture first-mover advantage in China can make up for it in India."

A.T. Kearney anticipates that global retailers such as Wal-Mart (Research) and French supermarket chain Carrefour, would take advantage of the more favorable FDI rules and enter India through partnerships with local retailers.

Joining India, Russia and Ukraine on the list of 10 countries retailers should enter immediately are China, Slovenia, Latvia, Croatia, Vietnam, Turkey and Slovakia.

"Eastern Europe really represents three distinct opportunities global retailers should be acting on: Russia, traditional Eastern Europe like Hungary and Romania, and 'new' Eastern Europe like Ukraine, Slovenia and Latvia," said Fadi Farra, senior manager with A.T. Kearney, in a statement.

"Retailers who plan properly can leverage capabilities across some of these smaller, closely located countries and gain a distinct advantage," Farra added.

Click here to read more about why Wal-Mart is hot on India.