The accused, Massimiliano Latorre and Salvatore Girone, are charged with murder in connection with the shooting of fishermen off the coast of the southern state of Kerala last year while serving as security guards on a cargo ship.

The two say they fired warning shots at a fishing boat believing it to be a pirate vessel with armed men onboard. Italy maintains the incident happened in international waters and that the men should be tried on home soil.

Last week, Italy opposed India's decision to appoint the anti-terrorism National Investigation Agency (NIA) to investigate the case, saying that the NIA only had the jurisdiction to investigate terrorist crimes.

It fears the NIA will invoke a maritime security law that attracts a mandatory punishment of death, which would violate an assurance given by India that the men would not be sent to the gallows.

On Friday, Italy said it would wait to see if the NIA invoked the maritime security law before deciding whether to challenge the court's decision.

"The order says the NIA will continue on the case, but let's see what charges are framed on the men. That will determine our course of action," said a lawyer representing Italy, who did not want to be named.

Tensions between India and Italy have escalated over the case since the shooting, peaking last month when Italy refused to send the marines back from a home visit. Outraged, India's top court briefly barred the Italian envoy from leaving the country.

Rome returned the marines for trial after New Delhi promised them the men would not face the death sentence. Italy's foreign minister resigned after the marines returned to India, saying he did not agree with the decision to send them back.

Italy abolished the death penalty in 1947. In the past six months, India has hanged two men convicted of militant attacks.

--By Suchitra Mohanty; Writing by Annie Banerji; Editing by Frank Jack Daniel (C)