The Indians were champions in 2013 and 2014 and are now on target to win a treble of titles.
The Indians have an unassailable 12 points after four matches and have a game in hand to prepare for the finals.
They play Great Britain in their last match on Friday.
Indian coach Jude Felix said it was always a big thing defeating a top-ranked team like Australia.
“I am proud of the players for achieving the win. But the display was a bit disappointing. We should have continued to play hockey our way after the fourth goal instead of throwing the ball and hoping to defend. That will not work against top teams. But thankfully they got the fifth goal and we managed to win the tie.
“We look forward to the final next,” he said.
India made a great start in the first quarter when they took a 4-0 lead. The Australians were simply overwhelmed by the Indians attack.
Gurusahibit Singh scored in the sixth-minute form a field attempt. This was followed by another field goal with Haspreet Singh deflecting the ball from close range.
In the 14th minute, Mandeep Mor managed to make good use of their first penalty corner as he flicked low to the right to give goal number three for India.
A minute later Vishanukant Singh was on target for a 4-0 first quarter lead.
The second quarter saw a more settled Australian side as they managed to pull a goal back in the 18th minute through a Damon Steffens penalty corner.
Steffens was again on target at the start of the third quarter with the third penalty corner in the 35th minute. It seemed like the Australians might make a comeback in the game.
In the 43rd minute, Shilanand Lakra added the fifth goal to ease the pressure on the Indian team.
The fourth quarter saw India starting with a 5-2 lead.
The last quarter saw the defending champions pushing hard but found the Indian defensive wall a hard nut to crack.
In the 58th minute from their 12th penalty corner attempt, the Australians gained a penalty stroke. Damon Steffens made no mistake for his third goal of the match.
And a minute later with 35 seconds on the clock, the Australians scored their fourth goal off a penalty corner, but time ran out for them and India go on to the final.
Australian coach Chris O’Reilly was disappointed with his team’s performance and said that chasing a four-goal lead was a tough proposition.
“It was a poor first quarter for us as they had the control of play. By the time we started scoring, the game was getting out of our reach. I am proud at the way the players fought back. This is surely a good learning curve for the players,” he said.