Injured Rohit Sharma will miss the white-ball games while Virat Kohli returns home on paternity leave after first Test.
Smith, however, added the visitors have quality players available to still pose a massive challenge to the hosts.
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Recovering from a hamstring injury, Rohit will be resting the white-ball leg of the tour while skipper Kohli returns home after the first Test in Adelaide on paternity leave.
"Look, Rohit is obviously a tremendous white-ball player, he has proven that for a number of years now at the top of the order, so obviously it leaves a bit of hole," Smith said during a virtual press conference facilitated by 'Sony Network'.
"But I guess the beauty with the Indian team is there are so many batters coming through, that are of high quality," he added.
Smith cited the example of Mayank Agarwal and KL Rahul whom he saw playing the IPL 2020 in UAE.
"You can look at someone like Mayank Agarwal in the IPL, just smashed, KL Rahul in the top order as well. There are plenty of options there for them so, look you leave a hole no doubt, but quality players there to back him up," he said.
He talked in the same tone when it comes to Kohli's absence for the last three Tests.
"The same (like Rohit) I think with Virat and the Test squad. You know there are a number of players who can come in and do a good job."
"Virat is of obviously of high quality, and we know how good he has been in all forms for a long period of times, so it is certainly going to leave a hole but I still do believe that they have got some quality batters waiting in the wings to fill that void."
Smith wasn't there the last time Australia hosted India and so he was asked whether it makes him hungrier to perform against one of the better attacks going around.
"I don't know if it makes me hungrier. I am always pretty hungry to go out and perform and do well. I guess it was tough watching from the sidelines and particularly with the team not doing as well," said the former Australia captain, who returned from his ball-tampering ban last year. He admitted, though, he didn't like seeing Tim Paine and his team lose 2-1 at home against the arch-rivals.
"Obviously they wouldn't have liked losing that series. That was difficult to watch, that was hard but certainly look forward to this series, two of the top teams in the word going out, two quality pace and batting -line ups and makes for an interesting and exciting summer."
Smith said given the nature of the rivalry with the Indians, no Aussie wants to disturb their focus indulging in any sledging war. And he feels, it's the same for his Indian counterparts. There has anyway come about a sense of friendliness playing together in the IPL.
"People talk so much about sledging and stuff but really there is very little that happens in our days. I think that's probably a lot to do with things like IPL," Smith said.
"You know IPL brings players from all around the world together, so for instance if you get stuck in to someone one day, you might be playing with them a few weeks or few months later."
"....And then, it's a bit awaked sort of conversation, so honestly, it does not happen too much in our days," he added.
(Inputs from PTI)