Air India will begin flying a triangular route between Delhi, Sydney and Melbourne on August 29 using the new Dreamliners, officials said.
A Dreamliner has 256 seats, including 18 in the business class. For four days a week, flights will be Delhi-Sydney- Melbourne, and for three days they will run Delhi-Melbourne- Sydney.
Until now, Singapore Airlines has held a strong grip on the travel market between Australia and India because of the lack of direct services. Most travellers have had to fly via Singapore.
Air India Commercial Director Deepak Brara said that the airline wanted to split direct services between Sydney and Melbourne to give "both cities the benefits of non-stop services".
"People who travel between Australia and India usually spend more than a week on either side," he said.
He said there had been long delays in starting services to Australia but added that people could take comfort from them happening because Air India had started taking bookings on Friday.
"That should afford some degree of certainty. There have been so many delays. The reason has been the delay in the delivery of the 787s and the groundings," he said.
NSW Premier Barry O'Farrell said the new services would generate a substantial growth in visitors to Sydney and the state directly from Delhi.
"This new Air India service will make getting to Sydney and NSW even easier, meaning we can welcome even more visitors from India," he said.