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Synopsis South Asia which includes seven nations popularly known as “Saarc” has been facing the problems of high magnitude which relate to external debt, how level of foreign reserves and huge deficit in balance of payments. Under such conditions, the most effective and efficient method which needs earnest consideration is with regard to FDI which could ease out considerable pressure on these nations. Both Japan and Germany are in a position to assist South Asian economies on an increasing scale to improve their competitive efficiency and export capability. In an attempt to review critically the trends and pattern of Japanese FDI in South Asia in general and India in particular, a study is undertaken to give a new direction to the statute for FDI in the 90s. The main emphasis in the study is to assess the increasing flow of FDI to South Asian economies with special reference to India and its prospects in the decade of 90s and beyond.