Palha fought hard against Thailand's Noppawan Lertcheewakaran before losing 5-7 3-6 in one hour and 55 minutes in the second round contest.
Palha had got a bye in the first round.
The Indian challenge is still alive in women's singles as country's top singles player Ankita Raina is up against Mongolia's Gotov Dulguunjargal.
In the women's doubles today, Rishika and Shweta thrashed Pakistani girls 6-4 6-0 in just 57 minutes to advance to the pre-quarterfinals.
World number 5 in doubles, Sania Mirza and Prathana Thombare are seeded fifth and they play their second round against Mongolia's Gotov and Bolor Enkhbayar.
Sanam Singh and Yuki Bhambri, who have exited from the men's team competition, will open their men's singles event.
10th seed Sanam will take on Kuwait's Alshatti Abdulhameed in the second Round while fourth seed Yuki is up against Qatar's Jabor Mohammed Al Mutawa.
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