Three of the Indians missed the cut by one shot at the USD 1.48 million event sanctioned by the Asian Tour and Japan Golf Tour.
Anirban Lahiri, who shot a 79 on first day went down to 68 in the second, but even that was not enough. Jyoti Randhawa (76-71) and Digvijay Singh (76-71) were also eliminated with totals of 147, just one outside the cut mark of 146.
Both Lahiri and Kapur were done in by finishing blues. Lahiri seemed to have fought back well after a first round 79. He had a birdie-birdie start and then gained a stroke at the seventh. But back-to-back bogeys meant he was back to one-under for the day.
Lahiri picked himself up again with three birdies between 13th and 16th. At that stage he was just inside the cut line, but a closing bogey saw him crash out.
Kapur started from tenth and double bogeyed the 11th and then closed with three bogeys in last four holes.
The Thai, who started from the 10th tee, struggled to get his round going and needed a 15 footer birdie putt to send him to the top of the leaderboard at the Ibaraki Country Club.
He posted a one-under 70 to hold a one-shot lead from overnight leader Shingo Katayama of Japan, who struggled to a two-over 73.
Tetsuji Hiratsuka of Japan, who won the 2011 Asia-Pacific Panasonic Open, battled to a 66 to share third position with Masahiro Kawamura.
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