Italy said on Tuesday it had paid $380,000 to the families of two Indian fishermen who officials said were mistaken for pirates and shot dead by an Italian navy security team guarding a merchant vessel.
Two marines, who were escorting the Italian-flagged tanker Enrica Lexie off India's south western coast in February, were charged with murder and are awaiting trial in the state of Kerala.
Italy's consul general in Mumbai, Giampaolo Cutillo, told reporters the payment - 10 million rupees to each family - was a gesture of goodwill and not an admission of responsibility for the deaths.
The incident triggered a diplomatic row, with Italy accusing India of breaching its territorial jurisdiction by arresting the marines in international waters.
Cutillo said the settlement had been reached with each of the victims' families in the coastal town of Kochi. The relatives agreed to withdraw their cases against the marines, he said.
"We have reciprocated the gesture to express our solidarity with the two families," Cutillio said. "We are sorry for the incident and we are conveying our deepest condolence to the victim's kin," he said.
Kerala's state government has not dropped its own charges against the two men and the widow of one of the victims told Reuters she was not happy with the compensation alone.
"The money will not compensate the loss of my husband. We want the two marines to get the maximum punishment so that such incidents will not be repeated in future," she said.
Attacks on ships have increased in the eastern side of the Arabian Sea, as increased security around the Horn of Africa has pushed Somali pirates to make raids as far over as the Maldives. The waters close to India are generally considered safer.