Sourabh, who got a bye in the first round, was defeated 21-18 17-21 15-21 by Chattisgarh's Shreyansh in the men's singles event at the Sher-e-Kashmir Indoor complex here.
World number 33 Sourabh, who played for Petroleum Sports Promotion Board in the team event, was leading the match after the first game but the 17-year-old Jaiswal raised his game to create pressure on his fancied rival.
The 19-year-old Sourabh started to feel the heat and crumbled under pressure to allow Shreyansh to come back into the match.
In the second game, Shreyansh grew in confidence and went into the break at 11-10. The Madhya pradesh-lad tried to get his act together but ended up making too many unforced errors as his younger opponent walked away with the match in the end. Shreyansh will next take on Nikhilesh Sarma in the third round.
"I never played him before. He is the defending champion and when I went into the match, I thought I will lose. But then in the second game, I started retrieving everything and it put pressure on him.
"I slowly grew in confidence and I am extremely happy with my effort," said Shreyansh, who has been training under Dronacharya Awardee coach Mohammad Arif for the last five years in Hyderabad.
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Sourabh said he could not execute his strategy in the match.
"I won the first game but in the second, I was in two minds with my strokes. I was confused what strokes to play and ended up making too many errors. Initially I was confident of wiping off the deficit but then I got under pressure," he said.
The Madhya Pradesh lad, who had skipped the Japan Open this month to focus on the Nationals, will next play in the Denmark and French Open next month.