Tourism executives predict the number of Indian students coming to Australia will fall sharply in 2010 after a series of racially motivated attacks. The assaults created a rift between Canberra and New Dehli.
Tourism officials estimate a decline in students from India will cost Australia $70 million in lost revenue.
There are concerns that young Indians have been scared off by a series of assaults in Sydney and Melbourne over the past year.
Australian police say that while some of the assaults were racially motivated, the majority were opportunistic crimes by thugs preying on easy targets.
Security around trouble spots, such as suburban railway stations, has increased. Senior government officials, including Prime Minister Kevin Rudd, have visited India to try to reassure potential students that appropriate safety measures have been taken.
But Tourism Australia, the government agency that promotes the country overseas, thinks deep- seated fears remain in India about the violence.
Tourism Australia spokesman Bernard Salt says the outlook for 2010 does not look good.
"The number of Indians arriving in Australia for education purposes will decrease by more than 20 percent in 2010," he said. "This is a segment that has grown strongly throughout this decade but the downturn is expected in response to concerns that the Indian community has had about safety."
The news media in India accused Australia of being a racist country, and the attacks have tarnished Australia's image as a friendly and relaxed place.
In recent years about 90,000 young Indians have arrived to study in Australia. Now the multi-billion dollar education industry worries about the effect of large decline in foreign students.
Despite concerns about Indian students, tourism authorities expect more international vacationers to visit Australia in the coming year as the travel trade recovers from the global financial crisis.
Most of the foreigners heading here on vacation in 2010 are expected to come from the United States and China.