While Shane Watson was out early on the morning of the fourth day, it was when Michael Clarke fell to a beauty of a ball from left-arm spinner Ravindra Jadeja that the rot set in.
Clarke was out at 4-108 and it sparked Australia to end up losing 7-23 to be bowled out for an embarrassing 131.
While the pitch could be blamed for the eight-wicket loss in the First Test in Chennai, the Hyderabad deck played reasonably well and it was a combination of good bowling by Jadeja and Ravi Ashwin, and lack of application and poor technique from Australia's batsmen responsible for this defeat.
Australia now trails the four-match series two-nil and after declaring its first innings closed, becomes the first team in Test history to lose by an innings after a declaration following on from batting first.
Australia started the fourth day's play on 2-74 after David Warner fell for 26 and Phil Hughes for a duck just before stumps on Monday with the tourists trailing by 266 on the first innings.
Australia made just 9(dec)-237 and then India amassed a massive 503 on the back of a 370-run stand between Murali Vijay and Cheteshwar Pujara.
Starting the fourth day at 2-74 with Cowan not out 26 and Watson nine, it took just three overs for Australia's first wicket to fall when Watson was caught behind by MS Dhoni down the leg side off the bowling of Ishant Sharma. It was Sharma's first wicket in his fourth innings bowled in the series.
Australia was then 3-75 with Cowan joined at the crease by captain Clarke, and they looked reasonably solid before Clarke received an almost unplayable delivery from Jadeja. It pitched on leg stump and gripped and turned to take Clarke's off stump.
The score was then 4-108 and then 5-111 when Cowan was caught at slip also off Jadeja for 44 when the ball took his edge, ricocheted off keeper Dhoni and went to Sehwag.
Wade and Henriques then took for a suicidal run and Henriques was caught well short of his ground to be run out by a direct hit from Jadeja to leave Australia in desperate trouble at 6-111.
Maxwell then came out and hit a quick boundary, but never looked comfortable and was soon out LBW to Ashwin for eight when trapped on the crease by an arm ball. Australia was then 7-123.
Peter Siddle then made four before meekly poking a ball to Virat Kohli off Jadeja before Wade fell the very next ball for 10, caught Sehwag off Ashwin for 10.
James Pattinson then survived for 26 balls without scoring before being trapped in front by Ashwin. Xavier Doherty remained not out one from 26 balls.
Ashwin took 5-63 for India and Jadeja 3-33.