The Indian team was whitewashed in the World Group Play-off by mighty Spain in New Delhi while New Zealand had blanked Pakistan 5-0 to stay in Asia/Oceania Group I.
AITA Vice President Bharat Oza, with permission from Secretary General Hironmoy Chatterjee, made the announcement at a press conference.
"The decision to host the tie was made at the AITA Management Committee on October 24," Oza, who is also President of the Maharashtra State Lawn Tennis Association (MSLTA), said.
"Davis Cup is a loss-making proposition, that's why not many come forward to host it," he said adding that the state government will support them for the organisation of the tie.
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Oza also said the term of both Amritraj, who had replaced SP Misra and Zeeshan, who came in place of Nandan Bal, will end in December.
"Their performance will be assessed by the selection committee which will submit a report to the Executive Committee, which will then decide if a change is required. There will be deliberation but I don't want to speculate," he said.
It had been reported recently that Amritraj had failed to impose discipline in the team.
Asked if the players' feedback will also be taken before deciding the fate of Amritraj and Zeeshan, Oza said it is AITA's "prerogative to decide on the issue".
When reminded that it was on the players' insistence that Misra and Nandan Bal were removed in 2013 and replaced by Amritraj and Zeeshan, Oza said the Federation will decide on this.
"AITA has been soft (on players)," he said adding that they do not appreciate the comments that were made by a few players when the changes were made.
"The players have also given a positive feedback on the facilities and courts here. They are happy to play," Iyer said.
Paes, after his arrival here for the Challenger, had said that the centre court here is fastest on the Tour, much to his liking and style of play.
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