The Indian government may still have reservations over allowing pension funds in stock markets, but retirement savings worth a billion dollars of more than one million Americans have already been invested in Indian equities and this is likely to rise further this year.

California Public Employees' Retirement System (CalPERS), the largest pension fund in the US, has recognised India as one of the best performers among all the emerging markets in its investment policy report for 2007, which was approved by its board on Monday.

Currently, CalPERS has investments of about $1 billion in over 55 Indian stocks, which represents a whopping over 260 per cent return since the purchase of these stocks.

Market experts feel CalPERS would be looking to expand its exposure to Indian stock market, as it has given impressive returns ever since the world's second largest pension fund with assets worth about $240 billion began investing here in 2004.

India has continuously remained on CalPERS' permissible list of emerging markets for equity investments, which is reviewed annually, since its entry in 2004.

For 2007, CalPERS board has decided it might invest in twenty emerging markets including Argentina, Brazil, India, Israel, Malaysia, South Korea, Taiwan, Thailand and Turkey.

The decision was based on a report from its consultant Wilshire Associates, which reviewed country and financial market factors such as political stability, transparency and labour practices of 27 emerging markets, CalPERS said in a statement.

According to the report, India and the Philippines made the biggest improvement in 2006, while a total of ten markets improved their scores, two (Hungary and Poland) moved down the ranks and 15 kept their scores unchanged during the year.

CalPERS, however, would not be permitted public equity investments in China, Colombia, Egypt, Pakistan, Russia, Venezuela, and Sri Lanka.

The pension fund, which provides retirement and health benefits to about 1.5 million state and local public employees and their families, had about $5.2 billion invested in emerging markets as of December 31, 2006.

While announcing its annual report last year, it had disclosed investments in 55 Indian companies at a book value of about $277 million, whose market value stood at over $353 million on June 30, 2006 itself.

It had recorded a total return of about 12 per cent on its investments during the one-year period ended June 30, while marking the third straight year of double-digit returns.

The cumulative current market value of these investments today stand close to $860 million dollars, while the fund has further expanded its investment portfolio since the end of its last accounting year, which ends in June.

Indian companies in CalPERS' portfolio include blue chips like Reliance Industries, Tata Steel, TCS, Tata Motors, SBI, Satyam, Reliance Energy, Reliance Communications, Maruti, Ranbaxy, M&M, Infosys, L&T, IPCL, ICICI Bank, HLL, HDFC Bank, Bharti Airtel, Bajaj Auto, Cipla and Dr Reddy's Labs.

Other Indian companies where it has invested are ABB, Allahabad Bank, Arvind Mills, Asian Paints, Aventis Pharma, Bajaj Hindusthan, Bharat Forge, Biocon, Cadila, GAIL, Gujarat Ambuja, HCL Tech, PNB and Sun Pharma.