New Delhi has raised its concerns about assaults on its students for more than a year, and is now warning it could jeopardise the numbers of Indians studying in Australia, worth $2 billion a year.
Prime Minister Kevin Rudd on Monday warned the attacks threatened to "impair" good relations with India, a valuable potential market for Australia with a growing middle class.
The issue threatens to erupt further after claims police were heavy-handed when breaking up an Indian protest rally that blocked a major Melbourne city intersection overnight.
Police believe that while some of the attacks may be racially-motivated, it is more likely part of a broader issue of escalating street violence.
During a conversation with Indian Prime Minister Manmohan Singh, Mr Rudd told him Australia was a tolerant and embracing society.
"(I told him) the more than 90,000 Indian students in Australia are welcome guests in our country ... the more than 200,000 Australians of Indian descent are welcome members of the Australian family," he said.
"All Australians ... deplore and condemn these attacks. These are senseless acts of violence.
"Australia is a country of great diversity, harmony and tolerance. We are a multicultural nation and we respect and embrace diversity."
The assaults are attracting international headlines after Australia's Indian community began voicing outrage following the recent screwdriver stabbing of Sravan Kumar Theerthala, 25, in Melbourne.
According to Victorian police, 1,447 people of Indian origin were victims of crimes such as robberies and assaults in 2007/08, up from 1,082 the previous year.
Ajay Unni, a Sydney representative from the Federation of Indian Students of Australia, says Australia is only now interested because there is a threat of losing money.
"The main headlines always start with saying Australia is probably going to lose its multi-billion dollar industry," he told AAP.
"I don't really know where Kevin Rudd is coming from - is he coming from the space of losing revenue or is he really concerned."
Mr Unni said he had personally spoken to between 15 and 20 students who'd been attacked over the last few years.
He urged police to keep records of international student assaults.
"From a security standpoint the police department really has to beef up their multicultural staff and their completion process of every case that comes to them," Mr Unni said.
Some students had complained they'd tried to contact police many times but officers had not got back to them.
Trade Minister Simon Crean told reporters Indian officials were raising the issue with Canberra from early last year, prompting the federal government to write to the states.
He admits it could damage the education export sector.
"This is a safe place in which to live and work, it's part of the brand that Australia wants to promote more of, and we have to protect that brand," Mr Crean said.
"It could be damaging ... there's no point sending your loved ones here to study if they feel under threat."
The Rudd government moved last week to set up a roundtable to address issues affecting overseas students in Australia, a $15.5 billion service export industry.
And the Australian Greens are calling for an inquiry into overseas education in Australia, which it will try to set up when the Senate resumes later this month.
AUSTRALIA IS RACIST. See opinion by Solomon Trujillo :
Australia 'racist' says former Telstra boss
MANY NATIONALITIES ARE RACIST, SO WHAT !!!Other countries are NOT forced NOT to be racist.
It is about louring students to BUY a DEGREE from Australian Universities.
Australian universities are KNOWN for giving degrees away to OVERSEAS students for payments 'under the door'.
Aussie students are being REJECTED in Aussie Uni's for overseas students because they PAY MORE for the SAME degree.
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