Vaiko accused the central government of "hobnobbing" with Rajapaksa, who was the country's defence minister during the 2009 Sri Lankan civil war.
"The government of Narendra Modi is hobnobbing with the Sri Lankan government. This is nothing but terrible betrayal of Tamils. Tamils in Sri Lanka are afraid and are in serious panic," he said, according to a party statement released in Chennai.
Fishermen of Tamil Nadu are repeatedly attacked by the Sri Lankan Navy, he alleged. "More than 580 Tamil fishermen have been killed in the past 30 years and their boats seized. Many more were put behind bars in Sri Lanka," he alleged.
The Rajya Sabha member said the protest was against Rajapaksa's visit to India on the invitation of the central government.
The protesters were briefly detained by the police, a senior officer said.
"Over 125 protesters, including four women, were detained at Parliament Street police station for about four hours. They were later released," the officer said.
Rajapaksa will arrive in India on Thursday on his first official overseas visit at the invitation of Prime Minister Narendra Modi.