In the first of a three-part series, Geoff Maslen looks behind the sudden decline in Indian student numbers.

Speculation that the flood of Indian students into Australian education institutions is about to dry up, along with a fair slice of the $2 billion they contribute each year to the national economy, has generated alarm in political and educational circles.

Foreign Minister Stephen Smith says 90,000 students from India are now studying in Australia’s schools, colleges and universities. But there is growing concern the market could collapse following widespread media reporting in India of savage attacks on students in Melbourne and Sydney over the past two months.

In a memo to Melbourne University staff after his recent India visit, vice-chancellor Glyn Davis said it was impossible to miss the anger in the media.

“Indeed, it was sobering to watch graphic TV footage and reporting of attacks on members of the Indian community at Epping while waiting at Delhi Airport,” Davis said.

“Victimisation of Indian students may be the action of a tiny minority but it is important to understand the depth of concern. The impact of extensive media coverage was much evident.”

Reaction from Canberra to the prospect of a market collapse was swift: a stream of politicians, including the ministers for education, immigration and foreign affairs, and Victorian Premier John Brumby, headed to India to try to assure the government and the populace the situation was being addressed.

Kevin Rudd will follow up their efforts with a visit of his own next month. Rudd met his Indian counterpart Manmohan Singh at the G20 summit in the US where they discussed the attacks against students.

But attempts by the politicians have not been helped by subsequent stories of shonky vocational colleges ripping off students and offering illegal access to permanent residency visas for high fees.

Or the sudden forced closure of half a dozen private colleges in Melbourne and Sydney after audits found they were operating with inadequate facilities and unqualified teachers. The shutdowns left hundreds of students part-way through courses that could not be completed.

The first signs of an unexpected downturn in what had become a booming market occurred in August when two universities in Melbourne reported signs of a fall in demand from India.

The nation’s biggest recruitment agency, IDP Education Australia, then announced it had experienced an 80% drop in appointments by students seeking visas at its 14 offices in India.

Yet factors other than bashed Indian students are likely to have a more profound impact on the overall education export market. Critics of the flood of Indian and Chinese students in the past two years say the sole reason most are here is to gain permanent residency.

The huge rise in the number of colleges offering vocational courses, and illegal means of gaining residency visas, is a direct result of the demand.

Changes to Australia’s skilled migration programme, which has cut out hairdressing and cooking as skills in demand, seem certain to result in a decline in enrolments once students in India and China realise they will not be able to gain permanent residency.

Take that lure away and the main reason why tens of thousands are prepared to take out high-interest loans, or borrow $20,000 or more from friends and relatives, disappears.

TOMORROW: Immigration law and the stampede for visas