Asian Junior champion Pallikal failed to get past ninth seed Annie Au of Hong Kong and lost 8-11, 5-11, 7-11 in straight games.
Annie Au overcame a slow start to beat Chennai-girl Pallikal, world ranked 34th, in the US$ 56,000 WISPA World Tour squash event -- the sixth WISPA Gold championship of the year.
Annie Au will next meet third seed Englishwoman Alison Waters in the second round, who beat Austrian qualifier Birgit Coufal 11-3, 11-3, 11-2 in the opening round clash.
World ranked 26th and India's top player, Saurav Ghosal had lost to Australian David Palmer 1-3 in the first round clash of the PSA men's event on Tuesday.
Ghosal lost 10-12, 11-6, 11-5, 11-9 in 59 minutes in the fourth PSA Super Series event of the year.