India entered the match high on confidence following a 5-0 thrashing of Bahrain in their first match on Wednesday, but could not sustain the momentum as Iran proved too hot to handle at the Gostaresh Foolad Stadium.
Midfielder Mohammad Sharifi opened the scoring for the hosts in the 17 minute, his colleague Amir Khodamoradi doubled the lead by finding the net just before the half time (43rd), while Mohammad Ghaderi took the match beyond India's grasp with his side's third strike in the 56th minute.
India coach Nicolai Adam, also in charge of India's U-17 World Cup team, made three substitutions after the change of ends and even beefed up the forward line by bringing in Rahul Kannoly Praveen, but the move did not yield the desired results.
Barely two days after their thumping win over Bahrain, Adam's wards looked a far cry from their dominant self as the Iranian players, egged on by the home crowd, controlled the game that was dubbed the team's "real test" by the coach in the pre-match press conference.