But concerns remained that a 10 per cent duty difference in gold prices in India and outside may lead to increase in smuggling.
Duty on the precious metal was hiked in June, when its import rose to $2.9 billion.
The government expects to garner an additional Rs 4,830 crore through hikes in duties on two other precious metals, platinum and silver.
The move comes after Finance Minister P Chidambaram said on Monday that the government would soon take measures to compress luxury and non-essential imports.
Gold is the biggest luxury import in India which does not contribute to economic growth in a significant way but is shipped into the country to meet the domestic consumption demand.
Soon after the announcement, the rupee recovered to 61.12 to the dollar from 61.66, but analysts said more structural reforms were needed to stem the fall in the India currency, which has lost more than 10 per cent against the dollar this year.
Revenue Secretary Sumit Bose said the government was working on the proposed hike in import duties on non-essential goods, but sources in the ministry say that import duty could be hiked on items such as high-end cars and LCD and LED TV sets.
The government raised the customs duty on gold from 4 per cent to 6 per cent in January, too, and thereafter to 8 per cent in June. Despite that, there was an 87 per cent increase in gold import in the four-month period from April to July. Gold import went up to 383 tonnes in the April-July period this year, as against 205 tonnes in the same period last year.
Bullion traders said that after the latest measure, gold prices could go up by Rs 600 per 10 grams.
Meanwhile, Minister of State for Finance J D Seelam said there have been apprehensions that a duty hike could lead to an increase in smuggling of gold or gold jewellery. In a written reply to a question in the Rajya Sabha, he said customs and other departments have been alerted to keep a vigil against smuggling.
During April-July, a total of 294 kg of gold, valued at Rs 75 crore, have been seized by the Customs Department.
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