The number of Indian first-year enrolments at UK varsities fell by 10 per cent - from 11,270 to 10,125 -, the figures released by Higher Education Statistics Agency showed.
That meant that the US overtook India on the list of countries that are the biggest sources of UK university first-year enrolments from outside the European Union (EU), edging into second place behind China.
"We could be doing better than this. It is essential that the UK government presents a welcoming climate for genuine international students and academics and ensures that visa and immigration rules are proportionate and communicated appropriately," said Dame Julia Goodfellow, Universities UK president and University of Kent vice-chancellor.
"These measures will be essential to meet the government's own target of 30 billion pounds education exports."
Just yesterday, Prime Minister David Cameron ruled out the reintroduction of the visa which was abolished in 2012. It had allowed students from countries like India to stay on at the end of their course and work for two years.