Sushil Kumar lost his first bout in more than four years while competing at Tbilisi Grand Prix in Georgia even as his compatriots Bajrang Punia and Deepak Punia progressed to the quarterfinals.
Sushil lost 4-8 to Polish grappler Andrzej Piotr Sokalski in the 74 kg category, not the most ideal result in the build up to the Asian Games. The WFI had exempted Sushil from trials, held last month.
The 35-year-old was handed exemption, given his past results and form as he had won his third CWG gold in Gold Coast.
Before Wednesday's defeat, Sushil had last lost a bout in May 2014 in Sassari (Italy) to Luca Lampis of France.
Sushil was re-admitted to the Target Olympic Podium Scheme (TOPS) after a gap of two years last month.
In the 65kg freestyle, Bajrang defeated Ukraine's Gor Ogannesyan to set up a quarterfinal clash with Iran's Yones Aliakbar Emamichoghaei.