Russia's Rasul Djukaev, the world no. 2, got the better of the Indian wrestler in the last four clash of the 66kg freestyle category, winning 8-2.
Both the grapplers won a point apiece in the opening round but the Russian took control in the second with seven points.
Sushil Kumar, who won the gold medal in the German Grand Prix at Dortmund earlier in June, had made it to the quarter-finals of the event in 2007.
The Indian was in top form in the opening rounds but fell short when it mattered the most.
Djukaev later faced world number three Tatsuhiro Yonemitsu of Japan for the bronze but lost 5-0 to eventually finish fifth.
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