Terming his decision as "absolutely right", Arthur said he was forced to suspend the four players -- Watson, James Pattinson, Mitchell Johnson and Usman Khwaja -- because of their unacceptable "back-chat" and "attitude".
"When we sat down as a leadership group and made these tough decisions I knew it would polarise public opinion, but internally I certainly know we've made the absolute right decision.
"This is a line in the sand moment. A point we'll look back on in a couple of years' time when we're back to number one in the world and say was a defining moment," Arthur wrote on the Cricket Australia website.
"Being late for a meeting, high skinfolds, wearing the wrong attire, back-chat or giving attitude are just some examples of these behavioural issues that have been addressed discretely but continue to happen," he added.
After two heavy defeats in the opening two Tests of the series against India, Arthur asked all the touring Australian players to prepare a three-point presentation on how they could improve the team's performance and were given five days to submit it, which the quartet failed to deliver resulting in their suspension.