India's bowlers struck twice to reduce Australia to 44 for two at lunch on day four of the third test on Saturday after setting the home side 399 for victory.
In-form paceman Jasprit Bumrah had opener Aaron Finch caught in the slips for three in the second over of Australia's second innings, before spinner Ravindra Jadeja snared the wicket of Marcus Harris for 13 with a catch in close.
Although troubled by the left-arm spin of Jadeja, Usman Khawaja survived to the interval on 26 not out, with fellow lefthander Shaun Marsh on two, and Australia 355 runs short of their victory target on a muggy, overcast day at the Melbourne Cricket Ground.
With the four-test series poised at 1-1, Australia face a monumental task to stave off defeat on a pitch that saw 15 wickets fall on day three.
Australia had grabbed five wickets after tea on day three and took another three in the morning of day four before India captain Virat Kohli declared their innings closed at 106 for eight.
Australia's chase began disastrously, with Finch falling to Bumrah's second ball.
Having survived a big appeal for lbw on Bumrah's first delivery, Finch threw away his wicket with an ugly attempt to cut that sent an edge flying head-high to Kohli in the slips.
Number three Khawaja was dropped when scoreless on the second ball he faced against Bumrah, flicking a difficult, low chance to Mayank Agarwal at short leg.
Kohli soon introduced Jadeja, however, who had tied Khawaja in knots in the first innings before having him caught for 21.
Khawaja danced down the wicket to smash the spinner for four with a lofted drive over mid-on but he was soon under siege.
He survived a big appeal for a catch at slip, with Kohli losing a review after the technology showed the ball brushing off the batsman's body rather than his bat.
Jadeja had his first wicket soon after, however, dismissing Harris with a ball pitched into the rough and finding an edge before lodging in Agarwal's mid-riff at short leg.
Australia seamer Pat Cummins earlier added two wickets to his four on day three, finishing with career-best figures of 6-27.
Opener Agarwal and wicketkeeper Rishahb Pant had resumed with India 54 for five.
Agarwal smashed spinner Nathan Lyon over his head for two sixes in three balls but became Cummins's fifth wicket for 42 when a ball nipped back and caught the bottom edge of his bat before clattering into the stumps.
Cummins had his sixth victim when Jadeja gloved a short ball to Khawaja at short point to be out for five.
Pant was the final Indian wicket to fall with a typically swashbuckling 33 after botching a ramp shot that edged to wicketkeeper-captain Paine.