"The British visa and immigration policy in the last two years has seriously affected small and medium businesses," CII President Adi Godrej said during a dinner meeting with the visiting London Mayor Boris Johnson here over the weekend.
Godrej asked for special treatment to applications from countries like India which contribute towards British economy.
"We feel that there should not be blanket rules and they should look favourably at countries that are contributing towards British economy," he said.
He added that ban on non-EU students to work as they learn has led Indian students to take courses in other countries like the US, Canada and Australia.
"Equally hard hitting has been the immigration policy for students, disallowing non-EU students from working even after completion of their course," he said.
"With this advantage gone and the increase in the tuition fees, a large number of Indian students have been moving to the US, Australia and Canada," he added.
Mayor Johnson, said he will request the British government to "sand paper" or polish its policies for smoother functioning, while Godrej suggested a relook in the upcoming policy announcement in 2013.
Making a hard pitch for investors, Johnson said it is "preposterous" of the French government to trouble steel giant ArcelorMittal and added that such a thing will never happen in London.
"I do think it is preposterous that the government of France should be signalling that ArcelorMittal, who sponsored that Orbit (at the Olympic Village), should now be not welcome in France," he said.
When asked for his comments on domestic auto major Mahindra's interest shown in buying out Aston Martin, Johnson said, "If it that happens, it is another sign of the
incredible co-operation and fusion between British and Indian businesses. Mahindra & Mahindra is a great company and I will look forward to it with great interest."
Kuwaiti firm The Investment Dar Company, the owners of the iconic British sports car maker Aston Martin which makes the James Bond movie cars, are said to be in talks with Mahindras and Italian private equity fund Investindustrial for a possible stake dilution for equity infusion.