Vyvyan Morris, 48, believes a man he saw in the village of Anjuna may have been the missing musician, who vanished two years ago.
The reported sighting will fuel fading hopes that Edwards, who had been fighting depression, anorexia and alcoholism, may still be alive.
It comes just six days after his former group, which has enjoyed worldwide success since his disappearance, won best band and best album in the Brit Awards.
Edwards, then 28, was reported missing in February 1995 after he failed to join his band colleagues for a flight to America where they were due to give television interviews. His passport and credit cards were found in his flat in Cardiff and, two weeks later, his silver Vauxhall Cavalier was found at Aust service station, next to the M4. Its car park overlooks the Severn Bridge and is a favourite spot for suicides.
But his body has not been found, prompting claims by many of his fans that he may not have taken his life.
Mr Morris, a media studies lecturer at Neath College in South Wales, was on holiday in India in November when he made the alleged sighting.
"I was sitting having a coke and I thought to myself: `I know that guy'. He was a little worse for wear. His hair was a lot longer, but he looked quite well and had quite a sun tan," said Mr Morris. "I asked a bloke who was sitting nearby and he said: `That's Rick'. He said he had come over to Goa about 18 months earlier."
But he kept silent about the sighting until news of it reached a reporter with a Welsh Sunday newspaper.
"It didn't concern me very much. The only thing I thought about was that, if it wasn't him, it would upset his parents," said Mr Morris.
Edwards' parents, who live in Blackwood, Gwent, are said to share his fans' optimism and have clung to sporadic sightings of their son, which have been reported in Germany, New York, Bedfordshire and Worcestershire.
Their hopes will be further raised by the latest sighting and Mr Morris's willingness to talk to police officers monitoring the rock star's disappearance.
However, the Metropolitan police, which is responsible for the case as Edwards had been staying at a west London hotel before he disappeared, gave the alleged sighting a guarded response.
A spokesman said: "He's still a missing person and we will look at any new information. We will follow it up, whether it's face to face or with a phone call. But unless there's some tangible evidence, there's nothing we can do." Danny Groom