India grabbed a 131-run first-innings lead but the calamitous run out of captain Ajinka Rahane was the catalyst for an Australian revival in the Boxing Day Test at the MCG.
The tourists lost 5-49 in the first session on day three to be dismissed for 326 at lunch - their advantage could have been greater if not for a monumental mix-up between the wickets.
Allrounder Ravindra Jadeja took off for a quick single in an attempt to bring up his 50, instead running out his skipper in the process.
Marnus Labuschagne combined with wicketkeeper Tim Paine to dismiss Rahane, who is filling in for Virat Kohli as captain, for a courageous 112.
Rahane's bat was just behind the line when Paine whipped off the bails to boost the Aussies, who lacked enthusiasm in the field during the first hour of play.
Jadeja failed to go on with his 15th Test half-century and was caught on the boundary by Pat Cummins for 57 when attempting a pull shot off Mitchell Starc.
Australia will begin their second innings after lunch and will be looking to improve on a mediocre 195 in their first dig.
However, the MCG pitch has flattened out since 11 wickets tumbled on day one.
Although Cummins hung on to an outfield catch to dismiss Jadeja, Australia's fielding woes continued on Monday.
Labuschagne put down his second chance of the match when he dropped Ravi Ashwin at leg-slip when the bowling allrounder was on four.
Starc, who looked sore and briefly went off the field, was the pick of Australia's bowlers in the first session and finished with 3-78 after a bouncer-heavy five-over spell.
Spinner Nathan Lyon (3-72) quickly cleaned up the tail with India's last three-batsmen contributing just nine runs between them.
