After making it to the World Group finals, India went down to Thailand 1-2 in the Asia-Oceania junior girls' Fed Cup tennis semi-finals in Kuala Lumpur, Malaysia, on Saturday.
In a nerve-wracking opening singles match, Sanaa Bhambri got the better of Nudnida Luangnam 7-5, 7-6 (7/5) to give second seeded India a 1-0 lead.
But Thailand fought back through their number one player Pichittra Thongdach, who defeated the 14-year-old Tara Iyer 6-1, 6-3, to level the tie 1-1.
In a thrilling three-set doubles match that followed, Luangnam and Thongdach subdued the fighting Indian combination of Kartiki Bhat and Sanaa Bhambri 4-6, 7-6 (7/4), 6-2 to clinch the issue for Thailand.
India will now fight it out with Chinese Taipei for the third-fourth positions.
Despite the semi-final defeat, India are assured of berth in the 16-nation World finals, to be played later this year, by virtue finishing among the top four in the zonals.
India had defeated Korea 2-1 in the quarter-finals on Friday.
Japan, who lost India in the group stage, made it to the final after defeating Taipei 3-0 in the other semi-final.
Japan might have also gained from the fact that the tie was reduced to a 10-nation event after several countries pulled out in the last minute.