Police said over 700 grams of heroine was recovered from the arrested men.
They said navy patrols in the waters off Sri Lanka's northern Kankesanturai coast observed two Indians on a boat handing over a parcel to Sri Lankans.
The two Indians along with their five Sri Lankan associates were arrested.
Investigations are continuing, the police said.
Deccan Herald is on WhatsApp Channels| Join now for Breaking News & Editor's Picks