There is “intense” concern among UK universities that a dramatic fall in the value of the Indian rupee could lead to another big drop in recruitment from the country.

At one point at the end of August, the rupee’s value against the pound was more than 20 per cent less than it had been in mid-May, and it is feared that this could make study in the UK too expensive for many prospective Indian students.

Sanam Arora, president of the National Indian Students Union in the UK, predicted that 12 to 15 per cent fewer Indian students would study abroad as a result of the rupee’s declining value, and that a “significant portion” of the reduction would hit British universities.

In 2011-12, the number of Indian students attending UK universities fell by 24 per cent, a drop blamed in part on the end of the automatic right to work in Britain for two years post-graduation.

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“Not only do Indian students have to shell out more as a result of the rupee slump, they also know that the chances of repaying that loan they took out for their studies has little scope of being paid off by way of post-study employment in the UK,” Ms Arora said.

An added headache for British universities is that the rupee has declined more against the pound than against the US or Australian dollar, she pointed out, meaning the UK could lose students to those competitors.

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From mid-May to 10 September, the rupee’s value declined 17.4 per cent against the pound, 14.5 per cent against the US dollar, but only 10 per cent against the Australian dollar, according to the currency website XE.com.

Edward Acton, vice-chancellor of the University of East Anglia, said that concern about Indian recruitment in the UK sector was “intense” and that the exchange rate was a “significant variable”, alongside tougher student visa requirements and “alienating” messages coming from the ����Vlog Office.

In concert they could “lock us into decline”, he warned.

The government has repeatedly stressed that there is no cap on foreign student numbers and that international graduates can still work in the UK after completing their courses, provided they are sponsored by an employer and earn above a certain threshold.

China dependency

Colin Riordan, vice-chancellor of Cardiff University and chair of the UK ����Vlog International Unit, said he would be “surprised” if the sector did not notice a decline in applications from India in the coming months.

“The…danger is that UK universities become overwhelmingly dependent on recruitment from China, which creates a potentially risky vulnerability,” Professor Riordan added.

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A 17 per cent rise in Chinese student numbers in 2011-12 offset the drop from India and entrenched China’s position as the biggest overseas recruitment market for UK universities: in that academic year, more than one in four non-European Union students in the UK hailed from China.

But this growth could rest on historically favourable exchange rates for Chinese students: the value of the yuan against the pound has risen by roughly 60 per cent since the end of 2007, before which time it had remained relatively stable.

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Daniel Stevens, international students’ officer at the National Union of Students, said that universities had to find a way of “hedging” against exchange rate fluctuations or offer hardship funding to protect overseas students whose currency falls in value.

However, a British Council spokesman said there was no evidence that the rupee’s fall would deter India’s “most ambitious” students.

Joanna Newman, director of the UK ����Vlog International Unit, said: “Even with the decline in the exchange rate, the UK has been shown to be a lower-cost study option than…the US and Australia.”

The fears over the rupee came in the same week as the launch of a report commissioned by the Department for Business, Innovation and Skills that stresses the non-economic value of international students.

The Wider Benefits of International ����Vlog in the UK found that overseas students who had studied in the UK had “extremely positive memories” of the experience.

They returned to their home countries with an “enhanced perception” of British people and culture, “allegiance” to British brands and a greater propensity in business to strike up trade deals with UK companies, it says.

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david.matthews@tsleducation.com