The reigning champions will clinch an unprecedented fourth successive English title if they win their last three matches
India were bowled out for 163 in their second innings of the third Test on Thursday, setting Australia a potentially tricky 76 to win as Nathan Lyon took eight wickets.
On a dramatic day two in Indore, Cheteshwar Pujara top-scored with 59, caught brilliantly at slip by Steve Smith, with Nathan Lyon taking figures of 8-64.
Earlier, resuming at 156-4, Australia imploded to be all out for 197 before lunch, their last six wickets tumbling for just 11 runs as seam bowler Umesh Yadav and spinner Ravichandran Ashwin ran riot.
Cameron Green and Peter Handscomb did well to survive the first hour on a pitch with unpredictable bounce, the tall Green using his long stride to neutralise India's spin attack.
But after the drinks break Handscomb departed for 19, caught by Iyer at short leg off Ashwin, having added 12 to his overnight score.
Soon afterwards Green fell for 21, trapped lbw by Umesh, who then bowled Mitchell Starc for one, sending the left-hander's off-stump cartwheeling towards wicketkeeper Srikar Bharat.
In a dizzying disintegration, Alex Carey then departed for three, lbw to Ashwin, Umesh bowled Todd Murphy for a duck and Nathan Lyon was cleaned up by Ashwin for five.
Ashwin took 3-44 and Umesh 3-12.
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