Karnataka batsman Manish Pandey pipped young chinaman Kuldeep Yadav as the 15th member of the touring party.
Rohit, who has recovered from a thigh injury, made a comeback as selectors gave due weightage to his round the year performance. Shami is making a comeback to the 50-over squad having last played an ODI during 2015 World Cup semi-final.
Overall, the selection panel, headed by MSK Prasad, kept faith in the squad which defeated England in a home series earlier this year.
Pandey has made it as an extra batsman in the squad to be led by Virat Kohli. Prasad said the selectors seriously considered Kuldeep Yadav too before he was put on the standby list.
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"We definitely considered the name of Kuldeep. He would have been a surprise package but whether we would have played with two spinners is a question. Since Yuvraj (Singh) and Kedar (Jadhav) can bowl spin, he narrowly missed out," Prasad explained after the selection committee meeting here.
Prasad made it clear that even though IPL is a premier domestic tournament, the performance of players in the event can't be the sole criteria for selecting a squad for a 50-over tournament.
"We respect IPL but in the longer format, we have to also consider the English conditions that we are playing in. Not just IPL but one needs to take into account the performance of last one year also in such a big tournament," Prasad said.
"May be one place here and there. But this is the best side."
Veteran opener Gautam Gambhir, who has been performing well in the IPL, was not even discussed.
"As of now, we have picked Shikhar Dhawan and Rohit Sharma as openers and Ajinkya Rahane is the back-up opener," Prasad replied when asked about Gambhir.
Premier off-spinner Ravichandran Ashwin, who has skipped the IPL owing to a sports hernia injury, has been included in the squad.
"The injury was not serious. The franchise was magnanimous enough to listen to our request to rest him. Rest is what Ashwin required as the last game that India played, he was there. That shows he is fit and not like others who are getting rehabilitated after surgery," Prasad said.
When asked if Ashwin's form in limited overs cricket, which has been dodgy for some time, came up for discussion when Kuldeep's name cropped up:"Kuldeep's name was discussed because of his quality more than anything else."
"Virat didn't play the last Test and also the first few matches in IPL. The more he plays, it is better for him. We have also given Jadeja a break. (But) considering how fit he is, it wasn't a problem," he said.
Mahendra Singh Dhoni remained India's first choice wicketkeeper.
Squad: Virat Kohli (captain), Shikhar Dhawan, Rohit Sharma, Ajinkya Rahane, Yuvraj Singh, Mahendra Singh Dhoni (wk), Kedar Jadhav, Manish Pandey, Hardik Pandya, Ravichandran Ashwin, Ravindra Jadeja, Jasprit Bumrah, Umesh Yadav, Mohammed Shami, Bhuvneshwar Kumar.
Administrative Manager: Kapil Malhotra (Cricket Club of India).