India, who last won the Junior World Cup way back in 2001 in Hobart, are on a mission to reclaim the title and will face Belgium in the summit clash on Sunday.
The hosts scored two skillful field goals in the second half through Gurjant Singh (42nd minute) and Mandeep Singh (48th) after Australia took the lead through Tom Craig (14th).
In the shoot-out, goalkeeper Vikas Dahiya rose to the occasion and made two fantastic saves to deny Australia's Matthew Bird and Sharp.
The Indians, on the other hand, were clinical in the shoot-out with skipper Harjeet Singh, Harmanpreet Singh, Sumit and Manpreet (Jr) finding the back of the net past the Australian custodian.
Earlier today, India's final opponents Belgium stunned six-time champions and title holders Germany 4-3 in the shootout in the first semifinal to enter the tournament final for the first time.
Van Doren made two brilliant saves in the shoot-out to deny Germany's Philip Schimid and Tim Herzbruch.
In the second semifinal, India had the better share of possession in the opening half but it was Australia who utilised their chances.
It seemed Australia took a cue from the Spaniards as they hardly gave any space to the Indians, relying mainly on man to man marking.
Australia utilised the first chance they got in the match. The Burras earned their opening penalty corner in the 13th minute and Tom Craig scored from the third attempt with a reverse shot from close range after the initial flick and rebound were saved by the Indian defence.
Australia secured two consecutive penalty corners in the 22nd minute but this time India goalkeeper Dahiya came to his side's rescue to deny Blake Govers from the second attempt.
India pressed hard and minutes later earned two back to back penalty corners but Harmanpreet Singh failed to find the back of the net on both occasions.
In the 32nd minute, Varun Kumar found Vikramjit Singh inside the circle but the latter's shot went straight to Australian goalkeeper Ashleigh Thomas' pads.
The hosts had their best opportunity of the opening half in the next minute when Varun's long scoop from deep found Simranjeet Singh unmarked inside the circle after an Australian defender fumbled, but the striker pushed wide with only the rival custodian to beat.
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