The 1-2 defeat was India's first against Hong Kong in five meetings and it has ended country's hopes to get promoted to Group I for next year's competition.
404th ranked Prarthana, who had so far won all her matches, lost 2-6 1-6 to unranked Eudice Chong in the first singles.
The onus to bring India back was on country's number one singles player Ankita Raina but she lost 4-6 3-6 to Liang Ling Zhang, placed 88 places below the Indian in the WTA rankings.
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