Virat Kohli and Ajinkya Rahane did the bulk of the stonewalling, their fourth-wicket stand lasting 26 overs and 85 runs.
Kohli fell the first ball after tea for 54, and a sensational delivery from Mitchell Johnson turned sharply to kiss the top of off stump and dismiss Cheteshwar Pujara.
The stage was set for a thrilling finish when a mistimed pull shot ended Rahane's 199 minutes of resistance, with the hosts needing four wickets in 15 overs.
Edges popped up here and there in the final hour of action, including one that Shane Watson dropped at first slip, but MS Dhoni and Ravichandran Ashwin were unbeaten at stumps.
"In my mind, Australia batted too long," commentator Shane Warne said during the first session.
The hosts will curse their fielding on days three and five, when too many chances went begging.
India's initial collapse yesterday could easily have been worse, with Kohli almost run out on four after a mix-up with Murali Vijay in the fifth over.
David Warner's return was wide of Brad Haddin, prompting another heated exchange between Kohli and the wicketkeeper after Haddin pranced over to Kohli and applauded his running between the wickets.
"There he goes on his team again," Haddin mocked.
"It's all about you. It's all about the one."
Umpire Kumar Dharmasena had a word with Smith and David Warner soon after, as ill-feeling between the sides continued to bubble.
Kohli, who was booed to the crease by some sections of the MCG crowd yesterday, has been Australia's chief antagonist throughout the four-test series and hit a masterful 169 on day three.
It wasn't the only near miss. Chris Rogers dropped a catch at point when Rahane was on 22 and lashed at a wide ball from Johnson. Nathan Lyon fumbled a return at the bowler's end in the final over before tea, with replays suggesting Kohli could have been run out. He did not add to his score after the break.
Kohli and Rahane both got off the mark with pulled boundaries, refusing to curb their natural aggression after Shikhar Dhawan, debutant KL Rahul and Vijay all fell cheaply.
"It's disappointing not to get the win, but it's still a series win for us," said Smith.
Earlier Shaun Marsh was run out on 99, falling centimetres short of his first test century on home soil.
Two rain delays didn't help the situation, but neither side had much interest in pushing the game along during a stop-start morning session.
Dhoni refused to take the second new ball, put men on the fence and, at times, didn't have a single slip in place. AAP
