Sehwag, who was dropped from India's ODI team for the recently-concluded series against England due to poor form, will lead a 14-member ROI squad.
Senior off-spinner Harbhajan Singh and maverick pacer S Sreesanth have also been included in the Rest of India line-up.
A significant development was out-of-form opener Gautam Gambhir being not selected in any of the squads. Gambhir's form has been shoddy and thus he won't get any longer version game before the squad for the first Test is selected. Zaheer Khan and Umesh Yadav have also not been considered as they are yet to submit their fitness certificates.
Manoj Tiwary, who has also completed his rehabilitation process, has been included in the Rest of India squad as well as India 'A' squad that will take on Australia.
According to team announced by the All-India Senior Selection Committee at Bengaluru on Tuesday, the ROI side comprises of six batsmen, six bowlers, one all-rounder in Jalaj Saxena and a wicketkeeper in Wriddhiman Saha.
Apart from the ROI squad, in Tuesday's meeting the selectors have also handpicked the Board President's XI and India A team for practice matches against visiting Australia.
Left-handed Tamil Nadu opener Abhinav Mukund will lead the Board President's XI side against Australia in a two-day game at Chennai from February 12 and 13.
Punjab opener Jiwanjot Singh, who scored five centuries has been included in the India 'A' squad.
Promising Jammu and Kashmir all-rounder Parveez Rasool once again got rewarded for his splendid performance in this season's Ranji Trophy as he has been included in the Board President's XI team for the warm-up game against Australia.
The 23-year-old Rasool earlier this month became the first player from Jammu and Kshmir to make it to the national side after he was named in the India A squad for the warm-up game against England.
Meanwhile, the India A team to take on Australia in a three-day match in Chennai from February 16 to 18 will be captained by Delhi left-hander Shikhar Dhawan, a statement from BCCI secretary Sanjay Jagdale said.
Rest of India: Virender Sehwag (captain), Shikhar Dhawan, Murali Vijay, Manoj Tiwary, Suresh Raina, Wriddhiman Saha, Harbhajan Singh, S Sreesanth, Pragyan Ojha, Ishwar Pandey, Abhimanyu Mithun, Ambati Rayudu, Shami Ahmed, Jalaj Saxena.
Board President's XI: Abhinav Mukund (captain), Robin Uthappa, Ambati Rayudu, Mandeep Singh, Kedar Jadhav, Parthiv Patel, Stuart Binny, Sarabjit Ladda, Parveez Rasool, Mohammed Shami, Parvinder Awana, Kamlesh Makwana.
India 'A': Shikhar Dhawan (captain), Jiwanjot Singh, Rohit Sharma, Manoj Tiwary, Ajinkya Rahane, CM Gautam, Rakesh Dhruv, Jalaj Saxena, Manpreet Gony, Vinay Kumar, Dhawal Kulkarni, Ashok Menaria.