UNIVERSITY and business leaders have united in a call for Scotland to have greater control over immigration policy.

Key organisations are demanding change in an open letter to the Smith Commission, which is looking at further powers for the Scottish Parliament.

The group - which includes Universities Scotland, the Scottish Council for Development and Industry (SCDI), the Scottish Chambers of Commerce and the Institute of Directors Scotland (IoD) - has come together as concerns grow over falling numbers of overseas students.

The decline is significant because universities rely on the lucrative fees paid by overseas students to subsidise courses for Scottish students - with institutions charging as much as £17,000 a year.

International students contribute an estimated £441m to the Scottish economy annually.

Business leaders and universities are now calling for international students who come to Scotland to be allowed to work here for two years after they graduate - with powers over immigration devolved to Holyrood to allow that to happen.

Professor Pete Downes, convenor of Universities Scotland, said a previous policy allowing two-year work visas called Fresh Talent highlighted the way forward.

Fresh Talent was introduced by the former Labour-led Scottish Government, but was scrapped in 2012 by Westminster.

Mr Downes said: "Scotland has already proved that it's possible to have a difference in immigration policy, bringing demographic and economic benefit to Scotland with no impact on the rest of the UK.

"Fresh Talent was a big success and we're looking to the Smith Commission, and to the UK Government, to give Scotland this opportunity again.

"There is a wealth of evidence to support the need for partial devolution of immigration policy."

The decline in international students from key countries follows the introduction of tougher visa restrictions by the Home Office following widespread concern at the proliferation of bogus colleges operating as "visa shops".

As a result, overseas students have found it harder to secure places and now have limited rights to work after they complete their studies.

The changes have led to a stark reduction in some groups of overseas students in recent years with numbers to Scotland from India falling by 49 per cent, while those travelling from Nigeria dropped 17 per cent.

Ross Martin, chief executive of the SCDI, said greater powers over immigration would make a significant difference to the Scottish economy, helping to develop a more highly skilled and productive workforce, creating more innovative businesses and improving global connections.

He said: "Major Scottish industries would soon benefit from this talent, the Scottish economy and society have distinct long-term needs and there is broad civic support for this move, and that is why we are jointly asking the Smith Commission to transfer these powers and enhance Scotland's ability to prosper."

David Watt, executive director of the IoD in Scotland, added: "There is little doubt the current UK immigration policy is not fit for Scotland's future."

Student body NUS Scotland and academics' union UCU Scotland have also signed the open letter.