The shortfall, comprising existing students who plan to abandon their courses here and hundreds more who intended to enroll, but are now seeking positions at universities in other countries, will cost the Victorian economy tens of millions of dollars.
Universities fear it could take years to restore Australia's reputation in India, with the families of Indian students instead favouring the United States and Britain, which they perceive to be safer destinations.
The international-student market is worth 15.5 billion dollars a year, making it is Australia's third-largest export industry behind coal and iron ore. Of the 465,000 foreign students, 90,000 are from India, The Age reported.
La Trobe University's international office acting director, Abizer Merchant, said Indian student enrollments for next year were set to halve to 300 following a dramatic drop in inquiries and applications since the attacks in May and Jun.
"'What's aggravated the situation is the Indian media making it sound like racism rather than opportunistic crimes. 'A lot of Indian parents are now willing to pay 10,000 dollars or more extra to send their children to the UK or the US rather than Australia," Merchant told The Age.
Federation of Indian Students of Australia president Amit Menghani said "a lot of students are saying they are in fear and, once they are done with this semester, it's most likely they will be going back."