A cosmic-themed threesome in his latest novel, 'The City of Devi', won him the award, whose past winners include illustrious authors such as Tom Wolfe and Sebastian Faulks.
The prize, which is bestowed by the magazine every year since 1993, aims to draw attention to "crude, badly written, or perfunctory use of passages of sexual description in contemporary novels, and to discourage it."
US-based mathematician-novelist Suri won over the judges with the climax of an extended sex scene involving three characters in the book set in Mumbai under the threat of a nuclear bomb.
'The City of Devi' is the third novel from the author of 'The Death of Vishnu' and 'The Age of Shiva'.
He has been long-listed for the Man Booker Prize in 2001 and is a professor of mathematics at the University of Maryland.
"In accepting this award we challenge everyone to make up their own mind about Manil Suri's 'The City of Devi'. As Tolstoy said in Anna Karenina, 'There are as many kinds of love as there are hearts'," his publishers Bloomsbury said in a statement after accepting the award on behalf of the author at a London ceremony Tuesday evening.
"Take 'The City of Devi' home to bed with you tonight and discover sex scenes that the TLS (Times Literary Supplement) praised as 'unfettered, quirky, beautiful, tragic and wildly experimental,' written by an author who, according to the 'Wall Street Journal', 'captures the insecurity, the curiosity and even the comedy of those vulnerable moments'," Bloomsbury said.
"As Jane Austen observed: 'One half of the world cannot understand the pleasures of the other. Which half are you in," it said.
The 54-year-old Indian-American won over strong competition from the likes of Susan Choi's 'My Education' and Woody Guthrie's 'House of Earth'.
The award, established in 1993 by Auberon Waugh, is not intended to cover pornographic or expressly erotic literature.
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