Iranian substitute Fatemeh Hosseini turned on the heat by scoring twice to overturn India's lead which they held on for a better part of the match courtesy a first half strike from midfielder Premi Chiru.
The win has helped Iran consolidate their place at the top of the group, while India will need to pick themselves up in the next match against hosts Bangladesh.
"The girls played well. But Iran were too good in the second half. They just had to score," conceded India head coach Maymol Rocky at the post-match media interaction.
Iran's coach Shadi Mahini said she told her team about India's weakness at half time.
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"I spoke to my girls at halftime and told them India's weakness," revealed rival coach Shadi Mahini.
"We were tired in the first half but I am glad girls kept that aside and played so well in the second," she added.
If the first half belonged to India, the second was surely Iran's. After India had taken an early lead through Premi, it took Iran 71 minutes to level.
Iran did not tinker with the team that thrashed UAE 9-0 while it was India's first match.
India could have taken the lead as early as in the 5th minute but Iran goalkeeper made a good effort to stop the goal.
Nisha was put though by Roja Devi one on one with keeper Mobina who showed good presence of mind to not leave her line, acrobatically stretching to her right to cling on to the ball.
Good intentions were not made to wait much longer as India, for all their pressing and midfield coordination in the early minutes, surged ahead albeit riding luck.