The authorities in the Indian state of Gujarat plan to charge more than 70 people under the country's new anti-terrorism laws.
Many people were made homeless after the riots
Almost 80 people have so far been arrested over their alleged involvement in the fire-bombing of a train last February in which almost 60 people - mostly Hindus - were killed.
Officials said the decision to use the anti-terror laws, introduced last year, came following the interrogation of a Muslim cleric they say helped plot the attack.
The attack, in the town of Godhra, led to some of the worst sectarian clashes in the state and left more than 1000 people - mainly Muslim - dead.
India's Prevention of Terrorism Act (POTA) allows the authorities to detain terror-related suspects for up to 90 days without trial.
Gujarat Home Minister, Amit Shah said: "We have decided to book the Godhra accused under POTA after the designs of the conspirators of the train carnage were unearthed."
Maulana Hussain Umarji, a cleric, is suspected of planning the alleged arson attack in Godhra.
Mr Shah told the AFP news agency the cleric; "confessed during his interrogation that he had received financial assistance from outside countries like Pakistan, Saudi Arabia and Dubai."
Police say Mr Umarji promised to pay a number of men, who used to meet at his mosque, to carry out the attack and told them to swear on the Koran.
Muslim leaders say Mr Umarji is a respected community figure and claim he may have been forced to make a confession.
Maulana Umarji met Indian Prime Minister Atal Behari Vajpayee and opposition Congress party leader Sonia Gandhi during their visits to Gujarat last year and complained of police harassment of Muslims.