According to the UK Border Agency, the number of student visas issued from India in 2010 was 41,000, which dropped to 32,000 in 2011.
Further reduction in the number of Indian students studying in the UK is expected with stricter rules coming into effect from April 2012.
Concerned over this, Paul who is the Chancellor of Wolverhampton and Westminster Universities, said government must remove international students from net migration figures and allow them to work in the UK for two years after their studies to show to the world it is open to genuine, hard-working students from all nations.
Paul said that he along with 67 other fellow University leaders in the UK Higher Education sector wrote to Prime Minister Cameron, who reaches India tomorrow, outlining their concerns about these changes and asked the government not to include international students in the net migration statistics.
"However, the Government chose to ignore our request and we are now seeing the repercussions," Lord Paul said in an interview to PTI.
He added: "I ask the Government to reflect and make adjustments to protect the UK's previously enviable position".
Lord Paul, a leading NRI industrialist, said over the last six months, he has been dismayed by negative worldwide publicity regarding changes to the UK student visa system and the effect it is having on current and potential international students.
Under the new policy, highly skilled international students are allowed to stay provided they have a job offer of minimum of 20,000 pounds a year from a government-approved employer. But only 20,700 such workers will be allowed annually.