India is ready to arm Sri Lanka to build up its deterrence capabilities but not for war. And it has also told Colombo not to do anything that leads to negative political fallout in India.
The Indian leadership has advised its Sri Lankan counterpart that war should not be considered an option to resolve the country's dragging ethnic conflict that has claimed around 65,000 lives and shows no signs of ending.
At the same time, there is simmering frustration here that while Sri Lankan leaders promise to work towards political devolution, the reality appears to be different.
India keeps a close watch on Sri Lanka, where unending violence since December 2005 has left hundreds dead, many in the past one month alone, and the 2002 Norway-brokered truce between Colombo and the Liberation Tigers of Tamil Eelam (LTTE) in tatters.
India and Sri Lanka also regularly consult each other and New Delhi has repeatedly urged Colombo that it is important to build a national consensus with the opposition over power-sharing with the minorities.
Sri Lanka has also been warned that nothing should be done that may impact on the safety, security and livelihood of Tamils.
A growing exodus of Tamil refugees to India, coupled with killings of Tamil civilians and destruction of Tamil property, is bound to generate ill-will towards Colombo in this country, particularly in Tamil Nadu.
Such a happening might impact on the policies of the central government, informed sources said.
A recent case is the hurried withdrawal of a group of Sri Lankan policemen who were being trained in Tamil Nadu.
Their exit followed protests by some Tamil Nadu parties against their presence in India.
So although India makes a distinction between the LTTE and Tamils, any exacerbation of the situation in the island will blur that distinction in terms of public opinion in India that the LTTE might take advantage of.
President Mahinda Rajapaksa has been informed that while India can supply weapons to build up Sri Lanka's deterrent capabilities, war is not an option -- Colombo agrees with this perception.
Rajapaksa, who took power in November, has also been told in the clearest of terms that he should not consider himself only the president of the "Sinhalese people but the whole of Sri Lanka", the sources explained.
The Sri Lankan government has been urged to show restraint in responding to LTTE's provocations, taking care that military retaliation should not worsen the already bad situation.
Explained an informed source: "The LTTE will keep provoking. What is important is how to react."
Top priority should be given to a resumption of the political process and look for via media that satisfies both sides - the dominant Sinhalese majority and the Tamil and other minorities.
Most Tamils, even those who disagree with the LTTE, are for a federal form of governance in Sri Lanka. But most Sinhalese consider federalism an anathema and at worst a recipe for separation.
"If a federal solution is not possible, then Sri Lankans should try to at least explore the idea of the Indian model of devolution and power sharing between New Delhi and states," the source explained.