A dramatic fall in the inflow of Indian students into universities in the United Kingdom, due to a restrictive visa regime, is causing concern among U.K. entrepreneurs.

The David Cameroon-led coalition government had done away with post-study work visa for students from April 2012 and has not responded positively to Indian pleas for revoking this “harsh step,” which has adversely affected the enrolment of Indian students in British universities as they feel they will not able to recover the huge fees paid by them.

A majority of the business leaders gathered here for a conference organised by the FICCI and the U.K. India Business Council to highlight the future of India’s economic growth through to 2020 said this move and certain other immigration related restrictions were sending a wrong signal.

However, in the face of open immigration from the east European countries of the EU, growing unemployment in the EU and drastic reductions in welfare benefits and decreasing job opportunities in the U.K., it is not easy to find sponsors paying 20,000 pounds for new students.

India is the second largest source of students with over 38,000 students after China. Recent surveys here showed that student enrolment from India decreased by 25 per cent in the last academic year.

Foreign students have to pay almost double the tuition fees and meet higher cost of living in the U.K. “Unless the U.K. government allows the students to partly cover the heavy expenses of studying, Indian students will not be willing to come,” Commerce and Industry Minister Anand Sharma said.

Leading entrepreneur who has investments both in India and abroad Lord Karan Bilimoria of the Cobra brand said the visa and immigration issue has become one of the biggest between India and the U.K.

“This is sending very bad signals. The decline in the number of students from India into Britain has badly impacted universities and the foreign students brought nearly 8 billion pounds to the U.K. economy.

“This is a very short-sighted move and [we] hope that it will be addressed as soon as possible as U.K. universities cannot afford a drastic drop in inflow of foreign students, especially from India,” he noted.

Equally vocal was Indian entrepreneur and patriarch of Bajaj group Rahul Bajaj. He said there should be no discrimination between whites and non-whites.