In the TV commercial from industry group Meat and Livestock Australia, a number of religious figures -- including Lord Ganesha, Jesus, Buddha and Scientology founder L. Ron Hubbard -- are seen sitting down together to a lamb-based meal and raising a glass to the meat.
The ad was met with anger in Australia's Indian community.
The Indian high commission (embassy) in Canberra said it had taken the issue up with the Australian government.
The Indian consulate in Sydney has also made a direct appeal to Meat and Livestock Australia to withdraw the commercial, according to the statement.
The industry body said it was meeting community groups to respond to their concerns.
It said it had undertaken extensive research and consultation when producing the advertisement, which was intended to promote inclusivity and not intended to offend.