Warner was hit on the elbow by a Mohammad Siraj delivery during the Delhi Test.
The southpaw sustained two injuries within minutes of each other during the second Test in Delhi. A Mohammad Siraj ball hit Warner on his elbow, which resulted in a hairline fracture before a concussion led to him being replaced by Matthew Renshaw.
"David Warner has been ruled out of the Qantas test tour of India and will return home," Cricket Australia said in a statement. "Warner was struck on the elbow in the second Test in Delhi and sustained a hairline fracture.
CA further said that Warner will undergo rehabilitation and is expected to return for the three-match ODI series against India, slated to be played from March 17 to 22.
"After further assessment, he will require a period of rehabilitation which will preclude any further involvement in the remainder of the Test series. It is currently anticipated that he will return to India for the three One-Day Internationals which follow the Test Series."
David Warner's spot was anyway under the scanner after his low scores in the first two Tests. The left-hander registered scores of 1, 10 and 15 in the three innings that he batted and looked far from being comfortable against the spinners.
Having lost the first two Tests in Nagpur and Delhi, Australia have already conceded an unbeatable 2-0 lead to India in the four-match series.
Indore and Ahmedabad are scheduled to host the third and fourth Tests from March 1 and March 9, respectively.