Also making a comeback to the side was big-serving Saketh Myneni, who is ranked eighth among the Indians in ATP list at number 495 but made the cut.
Prajnesh Gunneswaran (220) Sumit Nagal (261), N Sriram Balaji (291), Vishnu Vardhan (410) and Sasi Kumar Mukund (440) are placed above him but Myneni was chosen ahead of the others due to his ability to play both singles and doubles.
However, Myneni, chosen for Arjuna Award this year, is not going to get a singles match since Ramkumar Ramanathan, who is second-best ranked Indian at number 180 is also playing some of the best tennis of his career.
The Chennai-based player recently got the better of world number eight Dominic Thiem at Antalya Open.
More From This Section
Myneni will team up with Rohan Bopanna, who was an automatic choice for the doubles rubber being the highest ranked Indian in ATP doubles chart at number 17.
"We look at the rankings but not always," selection committee chairman SP Misra told PTI when asked about reasoning behind Myneni's selection ahead of others.
"If you look at the other players above Saketh, most of them, except Balaji, can only play only singles. Saketh can play both. So it made sense to have him in the playing four," Misra, also a former non-playing captain, added.
Asked about Paes, the chairman said," Paes will always be in contention in future. Rohan was an automatic choice since we had only one spot for the doubles. The captain wanted three singles players."
Upset and embarrassed, Paes had left the venue mid-way into the tie, prompting Bhupathi to reveal on Facebook that he had never promised Paes a spot in the final four and that his departure was the final nail in the coffin.
Paes needs one more win to claim the world record for most Davis Cup wins in doubles. He is tied on 42 wins with Italian legend Nicola Pietrangeli.
India's Davis Cup coach Zeeshan Ali said it was India's best chance to make the World Group again.
"They performances give us confidence. And also our players play good on indoor courts, where external factors would have no influence. If Milos Raonic does not play that increases our chances more."
The selection panel also picked teams for Asian Indoor Games, to be held in September in Ashgabat, Turkmenistan.
The team will be coached by former national champion Ashutosh Singh, who was recently credited by Vardhan for his success on the doubles circuit.
The women's team has country's best singles player Ankita Raina, Prarthana Thombare, Dhruthi Tatachar Venugopal and national champion Riya Bhatia. The team will be coached by Ankita Bhambri.
Davis Cup team: Yuki Bhambri, Ramkumar Ramanathan, Saketh Myneni, Rohan Bopanna.
Reserves: Prajnesh Gunneswaran, N Sriram Balaji.