The unseeded Indo-South African pair lost 4-6 6-4 6-10 in their opening round against the Austrian-Brazilian combo.
Bhupathi is second Indian to make a first round exit from the Masters tournament.
However, country's challenge is still alive in form of Rohan Bopanna, who along with Pakistani partner Aisam-Ul-Ha Qureshi have reached the pre-quarterfinals.
They face Colombian pair of Juan Sebastian Cabal and Robert Farah.