Shipments to the world's second-largest gold buyer jumped fourfold in October from a year earlier to $4.18 billion, raising concern about India's fragile balance of payments.
"We are working on it. The measures to slow gold imports are almost ready and may be announced today or tomorrow," said the source, who declined to be named because of the sensitivity of the matter.
Officials from the finance ministry and Reserve Bank of India (RBI) were considering whether to reimpose import restrictions on "star trading houses" that were eased earlier this year, the source said.
The source did not elaborate but said any announcement could be made by the RBI. A meeting between officials from the finance ministry and RBI last Thursday failed to reach any decisions.
The RBI restricted gold imports in early 2013 as India battled a balance of payments crisis triggered by the U.S. Federal Reserve's announcement that it would start to ease its programme of quantitative easing.
In addition to imposing a record high duty of 10 percent on overseas purchases of gold, the RBI introduced a rule making it mandatory to re-export a fifth of all bullion imports.
The embargo helped compress India's current account deficit, which fell to 1.7 percent of gross domestic product in the quarter to June, down two-thirds from a year earlier.
However, it also led to a surge in gold smuggling, which the authorities tried to counter in May by allowing so-called "star trading houses" - private jewellery exporters that had been barred from importing gold - to resume imports.
Although India's trade deficit has been kept in check lately by a sharp drop in the cost of oil imports, analysts warn that is unlikely to last if inbound gold shipments continue to surge.
They also say that emerging economies with structural external deficits remain vulnerable to any increase in U.S. interest rates. Economists on Wall Street now expect the Fed to raise rates around the middle of 2015.
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