Sidhu who has an Indian background had migrated to Australia as a child with her family from Singapore and will replace the outgoing High Commissioner Patrick Suckling.
Sidhu, a senior career officer with the Department of Foreign Affairs and Trade, has been also serving as First Assistant Secretary of the Multilateral Policy Division.
She has previously served overseas in Moscow and Damascus.
"India is one of Australia's closest and most significant partners in the Indo-Pacific region. It is our 10thlargest trading partner and our two-way investment is worth over USD 20 billion," Australian foreign affairs minister Julie Bishop said while announcing the new High Commissioner.
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"Sidhu will also have non-resident accreditation to Bhutan. Australia and Bhutan enjoy a warm relationship, built on strong people-to-people links and growing cooperation on international education," Bishop said.
Australia also has strong strategic and defence ties with India, conducting its first bilateral maritime exercises in 2015.
There are also over 450,000 people of Indian descent currently residing in Australia driving our strong education, cultural and tourism links, Bishop said.
Sidhu's previous roles included First Assistant Secretary in the Department of Climate Change, Assistant Director-General in the Office of National Assessments and Senior Adviser in the Department of the Prime Minister and Cabinet.