In their biggest match of the tournament, the Indian women were pushed on the backfoot right from the start by the Japanese but the hosts came from behind in the fag end of the match to draw parity and take the game to the penalty shootout.
However, India failed to impress in the penalty shootout with Chanchan Devi Thokchom, skipper Ritu Rani and Vandana Katariya missing in the first three chances, whereas Mazuki Ari and Yuri Nagai found the target for Japan to go 2-0 up.
India and Japan are now tied at 10 points with two and three wins from four matches, while Malaysia are placed third in the table with nine points.
Earlier, Shiho Sakai (4th minute) and Akiko (31st) scored for Japan in the first half to go into the break with a 2-0 lead. However, India came back quite dramatically in the dying moments with two quick goals through Soundarya Yendala (62nd) and Anupa Barla (65th).
The Indians could not pose any threat to the Japanese goalie early on. It was only in the final 10 minutes that the hosts stepped on the gas and made a few inroads in Japanese D but it didn't resulted into any goal.