The two boys, Faisal Aiwan and Ahsan Khursheed, were arrested in suspicion of the attack on Indian army base in Uri on September 18, 2016 that killed 19 soldiers.
Indian media reports that both the boys have been declared innocent.
The agency has stated in its report that no evidence of the boys’ involvement in the attack has been found.
The agency has suggested closing their case file.
Media reports also say that Pakistan released an Indian soldier Chandu Chohan last month.
The boys will be handed over to Pakistani authorities soon as a goodwill gesture.
Special coverage on China's Two Party Sessions by The Daily Mail - People's Daily