This will be the first meeting between the two countries, and Canada -- a seeded team ranked higher than India -- got the right to host the match through draw of lots.
"The Davis Cup Play-Off tie between India and Canada will be held on an indoor court at the Northlands Coliseum, Edmonton, Alberta, Canada from 15th to 17th September 2017," an statement from the All India Tennis Association said.
"The winning team will be promoted to World Group in 2018."
India would be happy to have avoided higher-ranked countries such as Argentina, Germany and Czech Republic in the draw, which was conducted in London.
Last year in the playoffs, India had lost 0-5 to Spain, who went on to reach the quarterfinals, losing to a Novak Djokovic-led Serbia 4-1.