Plans earlier by India to invoke a section of the maritime security act that provides for mandatory execution for causing death had aroused fury from Rome.
"They will be tried under Section 3(1) A of the act which does not carry any death penalty," a home ministry spokesman told AFP.
The new section to which the ministry spokesman referred carries a maximum 10-year term and a fine for acts of violence against any person on a ship.
, the home ministry had said it would not try the men under the maritime security act but revised its stand , saying the men would face lesser charges under a different section of the act.
The marines were accused of murder over the shooting deaths of two fishermen off the coast of Kerala while serving as security guards on an Italian-flagged cargo ship in February 2012.
Massimiliano Latorre and Salvatore Girone say they mistook the fishing boat for a pirate vessel and only fired warning shots.
India has dragged its feet in starting a trial, with legal experts attributing the delay to uncertainty over which law to use to prosecute the men.
The delay prompted the Italian marines last month to ask India's Supreme Court to drop murder charges against them and allow them to return home.
To speed up the process, the top court last Monday gave the Indian government a week to make a final decision on the marines' prosecution.
Italy insists the pair should be tried on home soil as the shootings involved an Italian-flagged vessel in what Rome insists were international waters.
India asserts the killings took place in waters under its jurisdiction.
The marines have been given bail and are staying at the Italian embassy in New Delhi.
They were allowed to go home to vote in elections and returned to India for trial in March last year.
Rome initially refused to send them back to India, triggering a diplomatic stand-off.
Indian Prime Minister Manmohan Singh promised Italy at the time of the sailors' return they would not face the death penalty.
The return of the marines to India caused huge controversy in Rome and prompted Italy's foreign minister to resign in protest.