The raid was conducted at Aguada plateau last evening, Superintendent of Police (ANC) Karthik Kashyap told reporters.
Gary Baird was arrested for illegally possessing 4.140 kgs of amphetamine, a synthetic drug.
"The drugs are worth Rs 2.05 crore in the international market," Kashyap said.
The accused had come to deliver the narcotics to a customer. The British man had been often visiting Goa since last several years and was currently staying in a hotel in Candolim beach village, he said.