Economists have attributed India's widening current account deficit to rising gold imports, among other causes.
Last week, finance minister P Chidambaram hinted that an option to make imported gold "a little more expensive" was "under the government's consideration".
A source said, "If no action is taken, we have to either earn about $80-100 billion every year through the capital account (such as foreign direct investment) or meet the deficit by depleting our foreign exchange reserves. Clearly, both the options are unrealistic."
A high customs duty will discourage gold imports by pushing up the yellow metal's landed price.