Despite getting the starts, Ritwik Bhattacharya and Gaurav Nandrajog and made regular tactical errors and failed at crucial junctures to hand over advantage to their opponents in the World Squash Federation event at the Squash Centre in Odense.
The opening tie saw heroics from India's number four Nandrajog who won the first game against Leo Au but soon fizzled out to lose 11-9, 7-11, 8-11, 2-11 in 42 minutes.
World number 65 Ritwik Bhattacharya, playing in place of injured Saurav Ghosal, displayed excellent volleying and consistency to win the first two games against Dick Lau.
But Ritwik allowed his opponent to come back with a vengeance and Lau kept him running in circles to win the tie in the deciding fifth game.
Ritwik lost 11-5, 12-10, 10-12, 5-11, 6-11 in 57 minutes. Playing a dead rubber, Harinder Pal Sandhu defeated Max Lee in straight sets 11-6, 9-11, 11-8 to give India some consolation.
Earlier in the week, ninth seeded India had failed to reach the top 16 round after finishing third in their pool. Top seeds Egypt and third seeds France will meet in the final of the biennial event after dramatic victories over Australia and England respectively.