Should we tell students they need to improve their English?
You may prepare a list of local resources where an international student could improve his or her English language skills.  For example


campus writing center
volunteer language practice pairing service
special courses or workshops for English language learners
opportunities to improve one's public speaking skills (the focus may not be on English, but this can be incredibly helpful) -- this might be offered in the Business school in your university
literacy volunteers program located in your town or city


Once you have your specific list prepared, you might ask your professor to distribute it for you.  You can point out in the intro that strong English skills increase one's employability!

In the meantime... set yourself a maximum amount of time per assignment you feel you can afford to spend correcting a student's English, and go ahead and make some corrections.  (Think what this will do for your karma!)

If a particular assignment is not gradable due to incomprehensibility, bump it up to the professor.