The decline in Indian students choosing UK as their study abroad destination has been flagged up as a worrying trend.
According to a new study, international students, studying in the UK, contribute nearly 2.3 billion pounds to the British economy every year.
The report by the business lobby London First and the PricewaterhouseCoopers (PwC) consultancy quantified the economic costs and benefits of non-EU students from countries like India and called on the UK government to improve the immigration system in their favour.
Nicola Dandridge, chief executive of representative body Universities UK, said that Indian students, the second-largest foreign students group after the Chinese, were being put off by an unwelcome visa regime.
"A number of worrying signs remain - not least a drop in those taking STEM (Science, Technology, Engineering and Mathematics) courses and the continued decline in Indian students, following a remarkable 49 per cent drop between 2010 and 2012," she said.
"If the UK wants to fulfil its potential in this growth area, it must present a welcoming climate for genuine international students and ensure that visa and immigration rules are consistent and properly communicated," she added.
"The government will pursue further reforms to tackle abuse while continuing to attract the brightest and the best to our world-class universities," said UK immigration minister James Brokenshire.
"This study quantify the benefits of student migration. The 2.3 billion pounds benefit of international students illustrates there is a huge amount at stake," said Julia Onslow-Cole, head of global immigration at PwC.
Calculations by the London First and PwC research team show that international students do not burden public services but contribute a total of 2.3 billion pounds through the spending.
"International students are made to feel unwelcome because of anti-immigration rhetoric - and the fact that they are currently included in the government's net migration target," said Jo Valentine, chief executive of London First.
She called on the Cameron government to follow the lead of Australia and Canada and reclassify international students as temporary visitors, not migrants.
And despite UK home office concerns about international students overstaying after completing their studies, the report says only 12 per cent stay in the UK after graduating.
According to the report, in 2013-14 there were almost 67,500 international students attending London universities - making up 18 per cent of the total student population in the capital, and 22 per cent of the 310,000 international students across the UK.