Shiva, up against second seed and local favourite Elnur Abduraimov, lost in a split verdict after a head-butt from his opponent resulted in a cut.
It was in the final few seconds of the opening round when Shiva sustained the cut, forcing a stoppage by the referee.
The disappointment of missing out on the gold aside, the silver is his third successive medal at the continental showpiece after a gold in 2013 and a bronze in the 2015 edition.
The Assam-pugilist, a World Championships bronze- medallist in bantamweight (56kg), shifted to lightweight in December last year. He went on to win a gold medal at the National Championships before a couple of early losses in tournaments in Bulgaria and Thailand.
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"It was a big decision and I am glad I have managed to prove myself. I was very clear that I wanted to compete in lightweight and even though it didn't go quite well in a couple of tournaments, I knew I could do it," he said.
"Obviously when you are competing against an established name, a few things play on your mind but then once you enter the ring, you have to block it out," he said.
There was also some disappointment for India with Gaurav Bidhuri (56kg) and Manish Panwar (81kg) losing their box-off bouts for World Championship slots.
While Gaurav lost to Japan's Ryomei Tanaka, Manish went down to Pakistan's Awais Ali Khan. Both the boxers were defeated in a split verdict.