The World Gold Council estimates about 150 to 200 tonne may be smuggled during 2013, on top of official demand of 900 tonne.
India's official imports were 21 tonne in November, down from 2012's monthly average of 72 tonne and sharply below the record of 162 tonne hit in May, according to Thomson Reuters GFMS.
The supply crunch helped drive Indian gold premiums to a record high of $160 an ounce over London prices in early December, versus about $1.30 to $1.50 an ounce in Singapore.
Jewellers, who estimate India's monthly demand to be nearer 60 tonne, have been asking for a duty cut to 8% and have the backing of the main opposition BJP, which is leading in state polls ahead of national elections due this year.
A final decision lies with finance minister P Chidamb-aram, who has so far resisted a cut but shifted last week to say he was in favour of continuing “some restraint” on imports.
NR Bhanumurthy, an economist at Delhi-based think-tank the National Institute of Public Finance and Policy, said: “We have unaccounted imports of gold that are much more damaging for the overall monetary system. It actually creates a huge problem for monetary policy. Now when they have come close to a comfort level on the CAD, there is definitely a need to review this import duty.”