The International Indian Film Academy (IIFA) awards ceremony will be held at Sugathadasa stadium later this week.
"Only 100 seats would be sold to the Sri Lankan public," minister Lakshman Yapa Abeywardana, told reporters at a media conference organized by the tourist board on IIFA.
"We have reserved 2,200 seats for Indian fans, while 400 seats will be reserved for Sri Lankan VIPs."
Under the allocation Sri Lankan VIPs would get 14.8 percent of the seats, while the public would get only 3.
7 percent of the seats. Officials did not say whether the VIPs would pay for the seats.
Indian films are very popular in Sri Lanka and some fans have gone to classes to learn Hindi to follow them.
A few years ago the state slapped a penal tax on Sri Lankan television stations to discourage the broadcast of Hindi language movies.
The tax does not apply to Indian made Tamil films.
A large number of Indians are expected to attend the film awards. They have been allocated 81.5 percent of the