The tourist, known only as Carol, refused to let the child leave her sight because she was so certain it was the McCann's missing daughter, who would now be aged eight.
However, Gerry and Kate McCann said yesterday after studying a photo of the child that they did not believe it was their daughter.
Madeleine McCann (left) shortly before her fourth birthday and (right) how investigators believe she might have looked aged six. Madeline would now be aged eight
The town of Leh in northern India where a British woman believes she saw Madeleine McCann
Local journalist Jupinderjit Singh said he was also sure that the child was the McCann's missing daughter.
'She had a striking resemblance to the picture of Madeleine before she disappeared, with bubbly cheeks and a little taller than before,' he told the Daily Express.
'When I asked Carol why she believed the girl was Madeleine she replied "It's almost impossible to not recognise her. We have seen her face so many times".'
The girl was walking through a market place with a Belgian man and his French wife when she was spotted by the tourist.
A DNA test is being carried out to see if the child is Madeleine - although her parents have already discounted the potential lead.
The McCann's spokesman Clarence Mitchell said: 'Kate and Gerry do not believe the child seen in India was Madeleine. They have seen photographic evidence and concluded that it was not her.
'We remain grateful for people's vigilance around the world. Madeleine is still out there and the search for her very much continues.'
The sighting was made in the northern city of Leh which lies in the state of Jammu and Kashmir. It’s the northernmost state of India and is situated mostly in the Himalayas.
At one point an American man is said to have tried to take the girl from the couple.
However the French woman and her Belgian husband, who had their passports copied by Leh Police, insist that they are the parents of the girl.
A spokesman for police in Leh said: 'It all depends upon the evidence like DNA for which help from Madeleine's parents and the British police was required.'
Madeleine was days short of her fourth birthday when she went missing on a family holiday in Praia da Luz, Portugal, in May 2007.
Maddie's parents marked the fourth anniversary of their daughter's disappearance privately with family and friends.
They recently launched a book, entitled Madeleine, about how she disappeared, with proceeds going towards funding the search for their daughter.
Despite a massive police investigation and huge publicity worldwide, she has not been found.
The official Portuguese inquiry into Madeleine's disappearance was formally shelved in July 2008, although private detectives employed by the McCanns have continued the search.
This picture of Kate and Gerry McCann was taken two months ago. The couple marked the fourth anniversary of the disappearance of their daughter with the publication of a book written by Kate titled Madeleine, Our Daughter's Disappearance And The Continuing Search For Her
She said she had to check that twins Sean and Amelie were still breathing because they did not wake as the frantic search for the missing three-year-old began.
She also believes the man who snatched her daughter may have gone to the holiday flat the night before but fled after being disturbed.
In May this year, David Cameron asked Scotland Yard to carry out a review of the investigation to bring a 'new perspective' to the case.
But the move prompted questions about why the review could not have been carried out earlier, when evidence was fresher.
And critics will question whether there is any realistic prospect of a breakthrough in the case, which has seen no major developments since Madeleine’s disappearance.
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