"There are lot of talented cricketers in the Indian side who are eager to perform. The upcoming Australia series at home will be a good test for them. I think India are favourites to win the series. They have the fire power to do it," Laxman told reporters at an award function here.
India will be playing Australia in a seven-match ODI series preceded by a T20 encounter at Rajkot on October 10.
Laxman, who retired from international cricket last year, was presented the Lifetime Achievement Award at the Sports Illustrated India's annual sports award ceremony.
On the return of Yuvraj Singh to the national team, the Hyderabadi said the stylish left-hander's comeback was just a matter of time.
"Yuvraj's return was expected. He is such a class player. You can't keep him out for long. He has lot to contribute to the team. He worked hard on his fitness and reaped benefits during the India 'A' series and the Challenger Trophy," Laxman said.
"I am sure India will gain with his presence in the Australia series," he added.