An Indian newspaper that published a cartoon likening Australian police to the Ku Klux Klan, says the cartoon reflects the mood in the country.
Mail Today editor Bharat Bhushan says people perceive the Melbourne police as a racist organisation because it is not acting fast enough on attacks on Indian students.
The cartoon shows a figure with an Australian police badge and a pointed white hood.
It was published on Tuesday after an Indian student, Nitin Garg, 21, was stabbed to death in Melbourne last Saturday night.
It was the latest in a series of attacks on Indians in Australia that has strained relations between the two countries.
Melbourne police say there is no evidence yet to suggest a racial motive.
Mr Bushan says the police are in denial.
Australian deputy prime minister Julia Gillard described the cartoon as "deeply offensive". Victoria state minister of police Bob Cameron also condemned the cartoon.
The Indian government issued travel advice to students going to Australia after the murder of Mr Garg.
Education industry threatened
The BBC reports the issue now poses a threat to Australia's international education industry, which is worth almost $US17 billion per year. Education is the country's third biggest export after coal and iron ore.
Australia has published figures indicating the number of Indians wanting to study there has plummeted by 46%.