Anil Kumble took five wickets as India fought back in the final session to restrict Australia to 337-9 on the opening day of the series in Melbourne.
Matthew Hayden's 28th Test century looked to have set the platform for a formidable total from the hosts before India claimed six wickets after tea to put the match back in balance.
Ricky Ponting opted to bat after winning the toss on the occasion of the 100th Test to be held at the MCG - despite a green pitch, it appeared a sound decision as Hayden and Jaques rode their luck to bat throughout the morning.
Kumble finally made his side's first breakthrough during the afternoon when he had Jaques stumped for 66 after enticing the left-hander out of his crease with a googly.
Ponting (4) lasted just 13 deliveries before having his off-stump uprooted by a beauty from Zaheer Khan, and in the next over Michael Hussey (2) fell lbw to another Kumble googly to reduce Australia to 165-3.
Michael Clarke joined Hayden in a 60-run, fourth-wicket partnership either side of tea.
However, both departed in quick succession in the final session as India seized the opportunity to get back in the game.
Clarke was caught at second slip by VVS Laxman for 20 off the bowling of RP Singh, while Hayden soon followed for 124 when he chipped a Zaheer Khan delivery into the hands of Rahul Dravid at mid-on.
Hayden's 183-ball innings featured nine fours and continued his superb record in recent Boxing Day fixtures. The Queenslander has now scored a century in each of the last three and averages 75.08 in eight Tests at the ground.
Andrew Symonds contributed a swashbuckling 35 from 42 balls, but perished to a fine catch after pulling a Kumble delivery to by sub fielder Dinesh Karthik at midwicket.
And Kumble added two more victims to complete figures of 5-84 - Adam Gilchrist (23) caught at point and Brett Lee lbw for a 12-ball duck.
Brad Hogg, who was preferred in the starting XI to Shaun Tait, was caught in gully for 17 to give Zaheer (3-93) his third wicket, although last man Stuart Clark frustrated India with three boundaries to finish the day unbeaten on 21.