Scott Morrison says asylum seekers identified as Indian will be considered economic migrants and returned to their home country.
Speaking on , Mr Morrison confirmed that 157 asylum seekers whose boat was intercepted at sea had been taken to Curtin Detention Centre in Western Australia to be processed by Indian officials.
He said the Australian government was within its rights to return people to India, which he described as a "vibrant democracy."
"I’d be surprised if anyone was seriously suggesting that people were being persecuted in India by the Indian government – apart from Sarah Hanson-Young - which is an absurd and offensive claim," he said.
"If we can't take people back to India, what is next? New Zealand?"
He said the country had been "praised by the UNHCR for the way that they’ve provided support to people from Sri Lanka living in India.”
“So the suggestion that people who have left a safe country are somehow fleeing persecution in India I think is absurd.”
The asylum seekers had been held on a customs vessel awaiting processing for a month before they were transferred to Curtin Detention Centre.
Mr Morrison said the Indian government had been happy for the process of identification to be carried out on the ship "but there was an issue of how long it would take and the welfare of people on board."
"That’s why they have been taken to Curtin," he added.
Mr Morrison said 18 Indian citizens who arrived by boat in 2013 had been returned to their home country after the government provided consular assistance.
He would not be drawn on whether any of the 157 asylum seekers had so far made claims for protection.
“That is not something that is part of that process at that time,” he said.
Group transferred to Curtin
The group of 157, including children, were being detained at sea since their boat was intercepted 27km from Christmas Island on July 7.
Some of the group were seen arriving on the Cocos Islands in video shot by the Guardian. They were then transferred to Curtin Detention Centre.
After arriving at Curtin, they will undergo identity checks by Indian consular officials.
India has agreed to take back its citizens and will consider taking Sri Lankan nationals who are Indian residents.
Australian Greens say the group has a legal right to apply for asylum in Australia.
Greens senator Sarah Hanson-Young is travelling to Curtin in the next few days to inquire on the children's welfare and to brief the asylum seekers of their rights.
"Just because (Prime Minister) Tony Abbott wants to trade in their lives, doesn't make it legal," she told reporters in Adelaide on Sunday.
Mr Abbott has said the handling of the asylum seekers is not illegal and in accordance with Australia's international obligations.
But he stressed they could never call Australia home because they did not come the "right way".
The decision to bring the group to land pre-empts a High Court challenge against their detention at sea.
