Famed for its temples and tropical beaches the kingdom is a major global tourist hub, with about 32 million visitors expected in 2016 and the industry accounting for around a tenth of the economy.
But a small number of foreigners fall foul of the law and the country's military rulers, who seized power two years ago, have vowed to crack down on those overstaying on their visas or committing crimes.
The proposal to monitor foreign tourists comes from Thailand's National Broadcasting and Telecommunications Commission (NBTC).
At a press conference in Bangkok on Tuesday the agency said the location-tracking SIM cards would help authorities.
"It is not to limit tourists' rights. Instead it is to locate them which will help if there are some tourists who overstay or run away (from police)," Secretary General Takorn Tantasith told reporters.
There were few details about the proposal. Takorn did not say if tourists would have to buy the SIM cards or if they would be given to them free of charge. Nor were there details about the plan's cost or timeframe.
He said authorities would only be able to track tourists using the SIM cards if they had a court order, but did not elaborate on how the tracking technology would work.
Speaking to reporters after the press conference, he added that the NBTC would seek advice from police, tourism authorities and tour operators before deciding whether to push ahead with the proposal.
The country's Ministry of Social Development and Human Security has backed the plan.
"It will be helpful if any foreigner comes and commit crimes because in the past they have been able to flee or it can be difficult to find them," ministry official Pongsathorn Chansri said.
Foreigners working in Thailand would not be required to have the SIM cards as they already have to register their details with authorities, Takorn said.
Since last year, foreigners who work in Thailand have to show their passports before obtaining pay-as-you-go SIM cards or mobile phone contracts.