Honk Kong's Tang Peng defeated Sharath (70), the highest-ranked Indian in the world, 13-11 7-11 5-11 11-1 11-8 11-7 in the qualification play-off round.
Sharath grabbed a 2-1 lead over the local favourite after losing a close first set. However, the higher-ranked Peng (36) got the next three sets to end India's challenge.
The 30-year-old Indian had entered the play-off round after registering easy wins over Iran's Alamian Nima (4-1) and Tuan Quynh Tran of Vietnam (4-2) in the group stage of the men's event.