The team overcame a jittery start in the quarterfinal to win three back-to-back sets and secure a place in the last four on the back of some good performances by skipper Amit Gulia and setter Muthusamy.
With Pakistan trouncing Kazakhstan in their quarterfinal fixture earlier in the day, the tournament is set to see a semifinal clash between the two sub-continent sides on Saturday.
The first set saw Australia catching India off-guard with their pacy game. India fell behind early and never recovered to eventually concede the set 16-25.
However, Gulia's boys showed no signs of panic in the second set as they started off confidently. But Australia caught up soon and the score read 15-15 at one stage.
India then took control of the proceedings and racked up 10 points in the subsequent minutes while their opponents managed only 4. After pocketing the second set 25-19, the Indian spikers began the next set in similar vein and hardly looked back before winning it 25-21.
The fourth set gave the motley crowd gathered at the venue some thrilling volleyball action as neither team gave an inch. With their team just a set away from getting knocked out, Australian spikers kept coming back hard at India.
Despite trailing 12-15 at one point, the Aussies mounted a strong challenge to make the scoreline read 20-18 in their favour. During the technical timeout, India coach Pritam Singh Chauhan exhorted his troops to finish the match in the fourth set itself. The team held its nerves and secured a well-deserved win by taking the fourth set 27-25.
"It's a fantastic achievement by the boys. We didn't begin in the brightest of fashion, but I had no doubt even at that point that we could pull it off. It's a great feeling to have defeated a strong Australian side with a set left in a knockout game," Chauhan said.
Earlier in the day, Chinese Taipei and Japan won their respective quarterfinal fixtures against China and Sri Lanka, respectively, to set up a semifinal clash on Saturday.
( With inputs from IANS )