Shaun Marsh’s 99 helped set India a record run-chase of 384 runs in two sessions, with Australia declaring at lunch on day five of the third Test at the MCG.
The hosts started day five with a 326-run lead.
Smith pulled the pin shortly after Marsh fell centimetres short of his first Test century on home soil, Australia progressing to 9-318 after two rain delays on Tuesday morning.
England’s 7-332 in 1928 remains the highest successful run-chase in an MCG Test, however India will have a minimum of 70 overs to set a new mark.
India will relinquish the Border-Gavaskar trophy if they fail to win in Melbourne, having lost in Adelaide and Brisbane.
A draw looms as the most likely outcome in the Boxing Day Test.
The weather didn’t help the situation, but neither side had much interest in pushing the game along in a stop-start morning session.
That was until Marsh teed off late, taking 12 runs off one over from India offspinner Ravichandran Ashwin.
Virat Kohli, Australia’s chief antagonist throughout the series, found Marsh short of his ground in the penultimate over before lunch.
Marsh resumed on 62 and started cautiously.
Ryan Harris scored 21 from 68 balls, likewise taking a conservative approach.
The nature of the 69-run partnership revealed much about Steve Smith’s thoughts regarding a declaration.
“In my mind, Australia batted too long here,” Shane Warne said, while calling the game for the Nine Network.
India captain MS Dhoni refused to take the second new ball, while he put men on the fence and at times didn’t have a single slip in place while bowling to Harris.
“India have to win this Test to stay in the series. So it’s a bit of a surprise,” Michael Clarke said on Nine.
“Maybe he (Dhoni) is thinking the least amount of overs they have to bat, the least amount of chance they have of losing.”
Only two balls were bowled before the players left the field, with the initial rain delay lasting a tick over half an hour.
The second break was shorter, but nonetheless stalled Marsh’s push toward triple figures.
Ashwin vowed after day four the tourists will tackle any target, given they need a remarkable victory to keep the four-Test series alive.
“It’s going to be hard work, but we’re up for it – we’re here to win games of cricket,” Ashwin said.
“We’ll be positive and try and see where we can go.”
AAP rf/rj