Starc was handy with both bat and ball in the opening two Tests, picking up five wickets besides scoring a crucial half century on a rank turner in Pune.
"Mitchell experienced some pain in his right foot during the second Test in Bangalore which unfortunately had not subsided a few days after the Test as we had hoped," said team physiotherapist David Beakley.
"We made the decision to scan his foot in Bangalore this morning and unfortunately it has revealed a stress fracture. "Subsequently, this means Mitchell will be unavailable for the remainder of the Qantas Tour of India and will return home to Australia to start his rehabilitation," Beakley added.
Starc is another player added to the injury list after all-rounder Mitchell Marsh was ruled out of the series with a shoulder injury.
Starc's replacement has not been named yet though Jackson Bird is the reserve fast bowler in the Australian squad.
"The National Selection Panel will confirm a replacement player in due course," said Cricket Australia in a statement. The four-match series has been fiercely contested so far with India winning the second Test in Bengaluru to draw level at 1-1. The third Test in Ranchi begins on March 16.