BY ANJALI CORDEIRO Piyush Bhatt, a grocery-shop owner in Pune, India, has seen more shoppers reaching for Gillette razors, Tide detergent and Pantene shampoo, an indication Procter & Gamble Co.’s recent push in India is helping its sales. But Mr. Bhatt won’t carry P&G’s Olay or Pampers in his 400-square-foot “supermarket,” which carries everything from frozen chicken to cosmetics. His reason: The cream is pricey for his shoppers and the diapers require too much space. Mr. Bhatt’s reaction highlights the growth potential and challenges for P&G as it tries to expand in the world’s second-most-populous country. Confronting a consumer-spending slump in the U.S. …