Modulation Instability is studied in the presence of an external periodic potential in microresonator comprising of a vertical cavity surface emitting laser with saturable absorber and frequency selective feedback. The role of intensity of input field, pump parameter, diffraction coefficient and saturable absorption on the modulation instability has been investigated. Thus, Modulation instability can be tuned by varying the system parameters. This aspect would be beneficial for the purpose of encryption. It is also observed that modulation instability is not explicitly dependent on externally applied potential whereas the effect of potential is shown implicitly by using numerical analysis. The presence of an external potential give the operating range of resonance frequency of the optical cavity instead of one value at the same system parameters. This operating range of resonance frequency is spatially dependent and varies with the system parameters.