India needed Ramkumar to create some magic on the final day of the tie but his failure to convert chances proved crucial as world number 51 Shapovalov shut the door on the visitors with a decisive 6-3 7-6(1) 6-3 win.
Their fate already sealed, Yuki Bhambri won the dead fifth rubber against Brayden Schnur 6-4 4-6 6-4 as India lost the World Group Play-off tie 2-3 to the hosts.
It is now fourth straight year that India have not managed to cross the Play-offs hurdle, having lost to Serbia, Czech Republic and Spain in previous three attempts.
Canada thus have earned their spot back in the 16-nation World Group after losing the first round to Great Britain in February this year while India will again strive in the Asia/Oceania Group I in 2018 to get to the Play-offs stage.
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The Chennai youngster took some time to settle but by the time he controlled the butterflies in his stomach, Shapovalov had gone up 4-1 with a break of serve in the opening set.
It was one-way traffic till the eighth game as the Canadian left-hander lost only three points till he came out to serve out the opening set.
Ramkumar tried to serve and volley but Shapovalov was quick with his returns, hardly giving time to the Indian to charge the net finish the points.
The Indian grew in confidence and put up a much better fight in the second set as he served two games at love. The chip and charge strategy paid good dividends as he led 5-4.
However, the good work came to a naught as he could not convert any of the four set points he earned in the 12th game and eventually lost the tie-breaker with his fifth double fault of the match.
Shapovalov broke the Indian at love in the sixth game to open up a 4-2 lead and clinched the tie in the ninth game on an unforced error from Ramkumar.
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