Ghosal, who made history last year by becoming the first Indian ever to make the last 16 of the World Championship, faced 15th seed Alister Walker, the world No.15 from Botswana whom he had never beaten before.
The 27-year-old defied the world rankings at the National Squash Centre - and denied his opponent a place in the last 16 for the first time in six years - by beating Walker 11-7 11-5 7-11 11-7 in 55 minutes.
Asked if he felt he could push through and make the last eight for the first time, Ghosal responded: "If I am able to do so, it would be huge for India. Dipika (Pallikal) was the first ever to reach the quarters, but never had a male player reached that stage."
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"I'm happy to win. I played well in the first two games, I was controlling the pace and trying to make him play in my strength," he said.
"In the fourth, he had the confidence after winning the third. But I got it back and went 7-2 up. It was a hard battle to try and close it off," he added.
Ghosal, the world No 17, will line up against fellow non-seed Henrik Mustonen, the 22-year-old Finn who celebrated his first ever appearance in the second round with a shock victory over England's No 7 seed and former semi-finalist Peter Barker.