India conceded an early goal when Otsuka Shiho converted a penalty corner for Japan in the second minute of the match.
The Indians had a chance to equalise in the eighth minute when they earned their first penalty corner, only to waste it.
The Indian defence led by goalkeeper Savita played a superb game. Japan earned three more penalty corners in the next 10 minutes but the Indian defence stood tall to deny the home team any further opening in the first half.
If not for custodian Savita, the margin of defeat could have bigger for India.
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Japan earned another penalty corner in the 50th which was brilliantly saved by Savita to keep India in the hunt.
India fought hard till the end but failed to score the equaliser.
The Indian eves put up a impressive display in the tournament, beating higher-ranked China 4-2 and Malaysia 5-1 before losing to Japan 1-2 in the league stages.
Japan won the gold, while India and Malaysia bagged the silver and bronze medals respectively in the four-team event.