Australian Immigration Minister Scott Morrison made the announcement on Friday following talks with Indian officials.
Consular officials from the Indian High Commission would be given access to determine identities and where possible arrange the return of any persons to India.
BBC News reported India would also consider taking non-nationals who were Indian residents.
Mr Morrison said no members of the group would be allowed to settle in Australia and declined to comment on where the group would be detained.
Local reports suggest they are being transferred to the Curtin detention centre via the Cocos Islands.
Lawyers claim the group, which departed from India, includes Sri Lankan Tamils, and rights groups have voiced serious concerns about their treatment.
The case came to light earlier this month as Australia detained a separate boat of Sri Lankan asylum seekers, screened their asylum claims at sea and returned them to Sri Lanka.
Human rights activists filed a legal challenge aimed at preventing similar handling of this second group of people.
Rights groups say Tamils can still face intimidation and violence in Sri Lanka, five years after the end of the civil war, which pitted the majority Sinhalese Sri Lankan military against Tamil separatists.
Under international treaties, Australia cannot return people to places where they may face persecution.
Following the announcement, Amnesty International said it showed that ‘stranding a boatload of people in the middle of the sea, in an effort to ‘stop the boats’, has achieved nothing’.
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