The strike force, too, have misfired a lot in the tournament, even though Ramandeep Singh and Akashdeep Singh have scored some scintillating field goals.
It was a hard-fought encounter as both teams played with great intensity.
Tajuddin Tengku completed the tally for Malaysia when he converted a penalty corner in the 20th minute. Razie Rahim, who opened Malaysia's scoring in the 19th minute, told HT: "It is a dream come true". India's goals came from the sticks of Ramandeep Singh (24th, 26th).
For India, it is their second defeat against Malaysia in little less than two months, having lost 0-1 to them at the Azlan Shah Cup last month.
Meanwhile, in other quarterfinals of the day, reigning Olympic champions Argentina will play Pakistan, the Netherlands will take on China and hosts England will square off against Canada.
Malaysia once against proved to be a thorn in India's flesh.
India remained unbeaten in the tournament until Tuesday, with strong wins against Scotland (4-1), Canada (3-0) and Pakistan (7-1). Malaysia pressed hard early on and secured two penalty corners but wasted both the chances.
"Today we were in control throughout the first half but mentally took our foot off the pedal when we went 3-0 up and conceding a goal caused some anxious moments but happy to have limited our opponents to just one goal". The idea was to pass the ball around quickly, not allowing the Malaysians to settle.
The two teams couldn't make much progress in the third quarter.
Ramandeep's opportunism put India back on level terms in the 26th minute when he picked the ball off Malaysian goalkeeper Kumar Subramiam's pads as he blocked a shy by Chinglensana Singh in goalmouth action during India's first penalty corner.
Malaysia has always been a thorn in Indian hockey team's flesh and so it proved it again.