Assassin's Creed is about the fight between Templars and Assassins. Templars are those who fought for the christianism. There were no such religion in feodal Japan and India (for the Japanese, the religion was taioism while it was hindouism for the Indian people). As of now, the only places that would make sense would be western Europe (such as France and England), the polar circle and early-America.

I think the game will be set during the Sengoku period (1467-1573)

The functions of the shinobi included espionage, sabotage, infiltration, and assassination, as well as open combat in certain situations. Their weapons included are: the Katana, ninjatō (Short Sword), shuriken (throwing blades), makibishi (like three-corner jacks) happō (similar to a smoke bomb), and of course… the old favourite, two blades hidden in the scallops that are attached to separated bracers.

Pretty sweet, eh?

That, and if you know a bit of Japanese mythology, you'll know that it says that there was once an island civilization that was lost beneath the ocean many, many years ago, off the coast of Japan. This could very well be the island that we (present day) have come to know as “Atlantis”. This could alternatively be the “Eden” civilization that we see Adam and Eve in at the end of the second game.