India's Ravindra Jadeja took seven wickets to dismiss Australia for 113 on a dramatic Sunday morning when the hosts lost one batsman in pursuit of a victory target of 115 in the second Test.

The tourists collapsed from their overnight 61-1 to get bowled out in the first session of day three as batsmen failed to tackle the low bounce in New Delhi, with the overdone sweep shot becoming their nemesis.

India reached 14 for one at lunch after KL Rahul, struggling for runs, fell to Nathan Lyon's off spin for one with a hit that lobbed off the short-leg fielder's knee and caught by the wicketkeeper.

At the crease were skipper Rohit Sharma, on 12, and Cheteshwar Pujara, on one in his landmark 100th Test, with the hosts needing another 101 to take a 2-0 lead in the four-match series.

Jadeja returned his Test best of 7-42 with his left-arm spin to add to his three in the first innings. Fellow spinner Ravichandran Ashwin grabbed the remaining three.

Ashwin struck in the first over of the day to get Travis Head caught behind for 43, three balls after the left-hander hit a boundary to add to his overnight score.

He got another key wicket inside the first half hour as he trapped Steve Smith lbw for nine, upheld on review.

Marnus Labuschagne attempted to take the attack to the opposition with the paddle shot and the reverse sweep but fell bowled to Jadeja for 35.

David Warner's concussion substitute Matt Renshaw looked clueless against spin in his eight-ball stay before he missed an attempted sweep, giving Ashwin another lbw.

Wickets fell like nine-pins and Nathan Lyon narrowly averted a Jadeja hat-trick.

Jadeja got wicketkeeper-batsman Alex Carey bowled while attempting a reverse sweep to claim a five-wicket haul and took two more to wrap up the Australian innings.

On day two, Axar Patel (74) and Ashwin (37) lifted India from a precarious 139-7 to 262, just one short of Australia's first innings total, with a eighth-wicket partnership of 114.