South Asia
In South Asia, Japan's role is mainly that of an aid donor. Japan's aid to seven South Asian countries totaled US$1.1 billion in 1988 and 1989, dropping to just under US$900 million in 1990. Except for Pakistan, which received heavy inputs of aid from the United States, all other South Asian countries receive most of their aid from Japan. Four South Asian nations?India, Pakistan, Bangladesh, and Sri Lanka?are in the top ten list of Tokyo's aid recipients worldwide. A point to note is that Indian Government has a no receive aid policy since the tsunami that struck India but Indian registerred NGOs look to Japan for much investment in their projects

Prime Minister Toshiki Kaifu signaled a broadening of Japan's interest in South Asia with his swing through the region in April 1990. In an address to the Indian parliament, Kaifu stressed the role of free markets and democracy in bringing about "a new international order," and he emphasized the need for a settlement of the Kashmir territorial dispute between India and Pakistan and for economic liberalization to attract foreign investment and promote dynamic growth. To India, which was very short of hard currency, Kaifu pledged a new concessional loan of ?100 billion (about US$650 million) for the coming year. Sri Lanka and Japan are two close friends since the early stages of post World War (II) since Sri Lanka extended a great support for Japanese development plans at the UN secretarial discussions.