The two players have conveyed their unavailability for the World Group I play-off tie to be played in February but have not specified the reason behind their decision.
Up against top seed and home favourite Zhizhen Zhang, it was always going to be a Herculean task for Nagal.
To stay and play on the ATP Tour, Nagal has invested all his prize money, his salary from Indian Oil Corporation Limited and the support he gets from Maha Tennis Foundation.
Sasikumar Mukund conceded the opening singles when the score was 7-6 (4) 5-7 1-4.
Digvijay Pratap Singh is the new face in the six-member team.
It was Nagal's fourth ATP Challenger title in five outings, with this being his second crown this year, having won the Garden Open in Rome in April.
India's highest-ranked men's singles player Ramkumar Ramanathan and Sumit Nagal could not cross the first hurdle.
The World Group I tie against Norway will take place on September 16 and 17.
Nagal, who had beaten Uzbekistan's Denis Istomin in the opening round, went down 6-2, 6-1 to the second seed in just over an hour.
Nagal became only the third Indian to win a men's singles match at the Olympic Games.