Pallikal decided against playing her first round match tomorrow, fearing an aggravation of the injury ahead of the pro season opening China Open from August 29 to September 3.
"It's very unfortunate that I have to pull out. As I have an important season coming up, I thought I needed to be fully fit before the new season starts," Pallikal told PTI after informing the Squash Rackets Federation of India (SRFI) about her withdrawal from the Nationals.
"I will definitely miss playing the nationals as I was looking forward to defending my title," the 25-year-old added.
A title clash between longtime friends and India teammates, Pallikal and Joshna Chinappa, has been a top draw at the Nationals for a while but the fans will now have to be contend with a potential men's singles final between India number one Saurav Ghosal and Harinder Pal Sandhu.
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Chinappa avenged the defeat by beating Pallikal in the 2017 Asian Championship final for probably the biggest title of her career.
Like last edition, Nationals organiser HCL has kept equal prize money with the men's and women's winner pocketing Rs 1.5 lakh each. The total prize money is Rs 11 lakh.
The championship will see a record participation of 550 players with 313 entries in men's singles and 65 in women's singles.
Both players were asked about the importance of playing Nationals despite a hectic pro tour and the recent trend of having equal prize money.
"Playing the Nationals has always been important for me. It is great that there is equal prize money now but honestly, I would play irrespective of the prize money," said Chinappa.
Defending men's champion Ghosal added: "It is very tough for me to say whether equal prize money is the right thing to do considering there is a lot of disparity in the entries.