The home secretary has she still wants to attract the "brightest and the best" to the UK
Indian business leaders have criticised plans to make visitors pay a £3,000 "security bond" to enter the UK.
The idea, to be piloted from November, is aimed at deterring people from "high risk" countries staying in the UK once their short-term visas expire.
Under the plan, they would forfeit the money unless they left when required.
The Confederation of Indian Industry said it was "highly discriminatory" but Home Secretary Theresa May defended the "selective" approach to migration.
The British government says the problem of so-called "overstayers" is one of the biggest challenges facing the immigration system and they want to target visitors from certain countries who present the greatest risk.
Although it has yet to be confirmed, it has been reported that visitors from India, Pakistan, Sri Lanka, Bangladesh, Ghana and Nigeria will be required to deposit £3,000 ($4,600) for a six-month visa, to be forfeited if they don't leave when they should.
'Disappointed'The Confederation of Indian Industry, which represents the country's largest businesses, said the plan was "very unfortunate" and risked further undermining Anglo-Indian relations already strained by changes to the UK visa regime for students.
"We share the UK's concern on illegal immigration but surely there are other more effective and non-discriminatory ways to put a check on it," it said in a statement.
It added that this and other recent changes threatened the "special relationship" that UK politicians often speak of with India.
"The industry in India is disappointed by the way the immigration rules in UK have been changing over the last few years.
"It strongly feels that such blanket rules for visas will negatively affect not only businesses, especially small businesses, it will also further bring down the number of students going to UK for higher studies and affect the tourism inflow from India to UK."
'Useful tool'The Home Office said the details of the pilot scheme had yet to be finalised and the countries yet to be selected.
But Mrs May said the move was "the next step in making sure our immigration system is more selective".
"In the long run we're interested in a system of bonds that deters overstaying and recovers costs if a foreign national has used our public services," she said.
"We're planning a pilot that focuses on overstayers and examines a couple of different ways of applying bonds.
"The pilot will apply to visitor visas, but if the scheme is successful we'd like to be able to apply it on an intelligence-led basis on any visa route and any country."
Indian students are already unhappy about new rules requiring graduates to find a job earning at least £20,000 to be able to remain in the UK once their studies end.
Mayor of London Boris Johnson has been among those to call for a rethink but, on a visit to India in February, Prime Minister David Cameron said the UK welcomed students from India and the change should not put them off.
Net migrationThe Conservatives have set a target for reducing net migration - the differences between the number of people entering the country and those leaving - to less than 100,000 by 2015.
Figures published last month showed net migration fell in the year to September 2012 from 242,000 to 153,000.
The Liberal Democrats and Labour have also set out their thinking on how immigration controls can be tightened, in response to what they say legitimate public concerns about migrants' impact on the economy and society in the past decade.
In a speech earlier this year, Mr Clegg said the security bond was a "useful tool" that, if implemented fairly and properly targeted, could make the immigration system work more efficiently.
The idea was floated several times by the previous Labour government but never implemented after protests at the turn of the century against plans for bonds of £3,000 and £10,000 being brought in.
Source: BBC News - Business http://www.bbc.co.uk/news/uk-politics-23044324#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
