The new route will see Air India fly a daily triangulated service from New Delhi to Australia via Sydney and Melbourne alternately.
Services are expected to start on August 29.
NSW Premier Barry O’Farrell says India is an important market for NSW.
Since 2008, visitor numbers from India to NSW have increased by over a third.
‘Visitors from India are choosing Sydney and NSW as their holiday destination for many reasons,’ the premier said.
The new route is expected to boost visitor growth to Australia’s largest state.
Mr O’Farrell says increasing trade between NSW and India is a key priority for the state government.
Destination NSW, Sydney Airport and Tourism Australia worked to secure the route. A marketing agreement will see the Air India service to Sydney promoted in the world’s second most populous country.
Sydney Airport CEO Kerrie Mather says India is one of Australia’s largest unserved markets.