India, who needed to win the tournament to qualify for next year's World Cup to be held at The Hague, Netherlands, edged past China 3-2 in the shootout after both the teams were locked 2-2 at the regulation time.
By virtue of this win, the Indians managed to avenge their 0-1 defeat to the Chinese in the pool stages of the tournament.
The Indian girls managed to hold on to their lead after the lemon break and denied any openings to the nimble-footed Chinese till the 51st minute.
China pulled one back in the 51st minute through Yan Yan's field goal to liven up the match.
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The Indians had themselves to blame as some sloppy defending towards the end allowed China to draw parity when Wu Mengrong scored the equaliser in the 64th minute.
In the shootout, the Indians came out on top, converting three of their chances as against two by the Chinese girls.
Meanwhile, Japan stunned defending champions Korea 2-1 in the final to win the Asia Cup and secure a place in next year's World Cup.