The two-day match, which was to begin tomorrow, was India's last practice fixture before the first Test against Australia, scheduled to start in Brisbane from December 4.
The Australian cricketer died at St. Vincent Hospital in Sydney today, two days after he was struck by a bouncer while batting in a Sheffield Shield game at the Sydney Cricket Ground. Hughes was 25.
Cricket Australia has also cancelled the ongoing round of Sheffield Shield games and the second day of the Sharjah Test between New Zealand and Pakistan was also suspended following the shocking news.
Soon after Shastri was done with, the training session was cancelled, and players and staff collected their gear and left the venue immediately.
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The Indian team offered its condolences to Hughes' family.
"In this moment of grief, we pray that they are bestowed with divine strength to overcome this unfortunate tragedy," they said in a statement.
"As fellow cricketers we cherish the memories of playing along with him and deeply respect his contribution to the game of cricket," the statement added.