Only Harmanpreet Singh was able to score in the shootout, while SK Uthappa, SV Sunil and Surender Kumar all shot wide off the target. Just four attempts were required from the two teams as Australia had gained a winning 3-1 lead.
Aran Zalewski, Daniel Beale and Simon Orchard scored for Australia, while Trent Mitton's try was blocked by goalkeeper P.R. Sreejesh.
There was plenty of drama in the shootout as Beale's shot was re-taken after he failed to score and sought a video review. The video umpire asked the shot to the taken again, leaving Indian coach Roelant Oltmans fuming on the sidelines.
The officials assembled to decide on India's appeal as trophies were removed from the ground and the fans also left the stadium.
After dicussing the appeal for more than an hour, the jury declared that there was unintentional obstruction on part of Indian goalkeeper PR Sreejesh in the seventh second thus the re-take of the shot was justified.
The presenatation ceremony was later held indoors.
India had won a bronze medal in the tournament way back in 1982 at Amsterdam.
Australia wasted a penalty stroke in the second quarter and India failed to capitalise on their superiority in numbers when Australia were down to nine men for a short while in the third quarter.
India's lone previous medal in the Champions Trophy came 34 years ago, when they got a bronze at Amsterdam in 1982. India made the first foray into the circle in the ninth minute when Mandeep Singh broke in from the right flank and his shot rebounded off Australian goalkeeper Andrew Charter.
In the next minute, Australia laid seize on the Indian citadel through four successive penalty corners, but goalkeeper Sreejesh brought off two fine saves. In the end, it was defender Surender Kumar who rushed out to block the penalty corner flick and the ball went out of the circle.
Talwinder Singh exchanged passed with Nikkin Thimmaiah and went into the circle from left, but he got into a very narrow angle and posed no danger as he shot straight into the goalkeeper's pads.
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