The present paper is aimed to the exploration of acousto-optic (AO) modulational amplification in ion implanted semiconductors. The AO modulational process has been treated as a four wave parametric mixing process and the effective third-order acousto-optic susceptibility characterizing the instability process has been deduced. By considering that the origin of modulational interaction lies in the third order AO susceptibility arising from the nonlinear induced current density and using the coupled mode theory, an analytical investigation of an intense laser beam in a strain dependent dielectric constant (SDDC) semiconductor crystal is presented. We found a significant change in threshold and gain characteristics with changes in charge imbalance parameter. The presence of colloidal grains (CGs) plays an effective role in changing the threshold intensity and effective gain constant.