The External Affairs Minister is empowered to delist people after necessary clarifications, said military spokesman Brigadier Ruwan Wanighasuriya.
The Indian and two others were on August 6 removed from the designated terrorist list announced in March, Wanigasuriya said.
"The removal from the list came after the necessary clarifications provided by them," Wanigasuriya said. Around 32 Indian residents were among the 424 individuals from 15 organisations included in the March-designated terrorist list.
Sri Lankans have been prohibited from making contact with the designated organisations and individuals as they allegedly supported LTTE's attempt for resurgence.
People from Australia, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Malaysia, Netherlands, Norway, Switzerland, Thailand, UK and Sri Lanka are also included in the designated terrorist list.
The government claimed those included in the designated list were funding the LTTE's effort to revive their campaign inside Sri Lanka. The nearly three decade-long military campaign against the LTTE ended on May 18, 2009.