Immigration New Zealand has declined on average about 10 student visa applications from Indian nationals each day - mainly because they contain false or misleading information.
In the past 12 months, more than half of the 7500 failed student applications have been from India.
Immigration general manager Peter Elms said the applications were declined for a variety of reasons, which included fraud.
"In general, the main fraud involving student visas is the provision of false and misleading information in the visa applications."
Immigration has declined 3453 applications from India and 1027 Chinese applications in the past 12 months.
India is New Zealand's largest source of new international students, although China remains the single largest source country.
Last week, the agency found 279 student applications lodged in Beijing contained fraudulent information after randomly checking 1800 applications.
Immigration is looking for nearly 200 student visa holders who are among a group of 231 Chinese nationals who came to New Zealand on student visas obtained fraudulently.
Between July 2008 and last month, 145 prosecutions were laid for immigration fraud.
"Immigration fraud will not be tolerated," Mr Elms said. "Fraud strikes at the heart of New Zealand's immigration system.
"The integrity of our immigration system is paramount, given its importance to New Zealand and our international reputation."
In the past year, 14 permanent residents who came here as international students also had their residencies revoked because fraud was discovered.
"Where fraud is suspected based either on our own discoveries or information received, we will investigate and act irrespective of how long ago the person was granted entry," Mr Elms said.
An Indian education agent, who spoke on the condition of anonymity, said a "money-go-round loan" was commonly offered by agents in India to students who did not have enough money.
"For a fee, money is transferred into a student's bank account and the agent will obtain falsified bank statements to show that the money had been there for quite a while as proof that it belongs to the student," said the agent.
"This is to show Immigration that the student has the means to support himself and pay for his school fees.
"But the money is taken out once everything is settled and it is then transferred for the next student applicant to use."
He said many students from India wanted the visas not for study, but to work in New Zealand in places such as vineyards, and believed they were able to pay the agents from their earnings once they got here.
"Many of them hope to become permanent residents, but would not qualify under any category other than through becoming an international student," the agent added.
This year, 3247 student visa holders have been granted permanent residence in New Zealand, and 83,899 student visa applications have been approved for foreigners to study here.