Dwivedi was one five shots behind Thailand's Varanyu Rattanaphiboonkij, who extended his overnight lead to four shots after posting a second straight five-under-par 67.
Singapore's Gregory Foo, who is playing in only his second start as a professional golfer, posted a 68 to move to second place.
The 26-year-old Indian, who had shot 71 in the opening round, picked up birdies at the 4th, 9th, 12th and 18th holes in a flawless round to take his total to five-under 139.
Varanyu, who broke through on the Asian Development Tour (ADT) in May, marked his card with nine birdies, including four consecutive ones from the second hole, against a bogey and a double-bogey to remain atop the leaderboard with a two-day total of 10-under-par 134.
Being one of the richest events on the ADT this season, the Combiphar Players Championship will be crucial in the race for the Order of Merit title, as well as the seven coveted 2019 Asian Tour cards on offer.
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