The Indian pair beat Scotland 12-10 8-11 11-5 in the semi-finals earlier today.
However top seeds Malaysians, Eain Yow Ng and Andrea Jia Qi Lee, proved too good for the Velavan and Harshit in the gold medal match.
The Indians played their part to potential but the Malaysian duo had such good finishing and that made the difference. Malaysia won 11-6 11-5 to take the gold.
Earlier Velavan and Harshit however played outstanding squash to get past Scotand, according to coach Major Maniam.
Velavan and Harshit started well in the third, went into a 6-3 lead. The Scots were not out yet but Velavan at this stage came up with some aggressive drives directed to the woman player Carrie and that did the trick. Taking a leaf from his approach was Harshit, who smartly reeled off three points in a row to ensure a historic entry for India into the final.