The Indians started brilliantly and pocketed the first set 25-20 in 24 minutes.
But Japan got their acts together soon to drew parity by winning second set 25-19 in 23 minutes.
India once again restored their lead by winning the third set 25-23 before losing the next set 20-25 to take the match into the decider.
In the deciding set, it was a neck-and-neck fight between the two sides but in the end Japan held their nerves to win the set 15-13 and prevail over the Indians in the hard-fought quarterfinal duel that lasted an an hour and 53 minutes at the Songnim Gymnasium.
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