In the face of strong opposition from China and a few other countries, India's application for membership did not go through at the NSG plenary which concluded in Seoul on Friday.
India is not a signatory to the Nuclear non-Proliferation Treaty (NPT) and that was the ground used to thwart India's bid.
Sources said that Mexico's suggestion was also opposed by China but it found support from a large number of countries including the US.
A panel for informal consultations on India's membership has also been set up by the NSG and it will be headed by Argentine Ambassador Rafael Grossi.
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"We are confident that we have got a path forward by the end of this year. It needs some work. But we are confident that India would be a full member of the (NSG) regime by the end of the year," the Obama administration official told PTI in Washington.
China was unrelenting in thwarting India's NSG bid despite Prime Minister Narendra Modi urging Chinese President Xi Jinping during a meeting in Tashkent on the sidelines of the Shanghai Cooperation Organisation summit to support India's case on its merits.