The Australian state at the centre of a furore over attacks on Indian students said on Tuesday it would introduce hate laws to combat the problem, which has caused outrage on the sub-continent.
Authorities in Victoria said they would look at changing laws so that judges can take account of prejudice against a particular group of people when sentencing for a crime.
The move is an attempt to contain the fallout from a series of attacks on Indian students, although the changes would apply to hate crimes prompted by religion, sexual orientation and gender, as well as race.
"It may lead, in certain circumstances, to increased penalties," Victorian state Attorney-General Rob Hulls said.
"What we're looking at is ensuring that judges take into account whether or not a crime has been committed purely based on hatred or vilification of a particular group."
Hulls said the changes should be introduced by the end of the year.
Indian media have extensively reported the attacks, dubbing them 'curry bashings' and splashing with headlines such as 'Australia, land of racists.'
Students in Melbourne also highlighted the issue at a peaceful city-centre rally which ended in scuffles as it was broken up by police early on Monday.
Footage of police dragging students away was beamed back to India along with allegations the officers used excessive force.
The students were demanding action after at least 70 attacks in Melbourne in the past year including four in recent weeks. One victim is in a coma after being stabbed with a screwdriver.
Police say 30 per cent of assaults in Melbourne's western suburbs are against Indians, a disproportionate figure in a city of almost four million with an Indian student population of less than 50,000.