The Supreme Court ruled last week that only lawmakers and not the courts can change the law. The ruling struck down a 2009 lower court decision that said the law violated fundamental human rights.
The Supreme Court ruling dealt a blow to gay activists who have fought for the chance to live openly in India's deeply conservative society.
Gautam Bhan, a gay activist, welcomed the government move Friday and said the Supreme Court was the forum that should decide the issue.
The law, dating back to the 1860s, when Britain ruled over South Asia, states that "whoever voluntarily has carnal intercourse against the order of nature with any man, woman or animal" can be punished by up to 10 years in prison.
According to international human rights groups, more than 70 countries have laws criminalizing homosexual conduct, with India by far the most populous.