New Zealand will take on South Korea for the third place play-off.
Mandeep Singh scored a field goal in the 20th minute and Rupinder Pal Singh's drag-flick in the 48th minute were the two strikes for India while Saari Faizal scored both the goals for the hosts in the fifth and 70th minute.
Malaysia, with a final tally of 9 points had already made it to the final before taking on India. Malaysia meant business from the word go with the rhythm and cohesion falling in place quickly but the Indians came back strongly to hold them on a tight leash and emerged a deserving winner.
Malaysia forged ahead in the fifth minute when a daper Saari Faizal banged in the first penalty corner of the match.
The hard and high scoop of Faizal brooked no answer from Indian goalkeeper Srejeesh, on a day when he had much less work to do than his counterpart Kumar.
India did well to orchestrate concerted attacks from the flanks. Midway through Manpreet Singh set up Mandeep Singh nicely only for the latter to make a hash of it with a soaring hit into the stands.
Not long after came India's first penalty corner only for Malaysian goalkeeper Kumar to continue his good work from where he left off in the earlier matches.
Rupinder Pal Singh's drag flick has been ammunition for Kumar with his confidence in the right place coolly palmed it away. A combined move between Manpreet and Akashdeep had the menacing look till Kumar got into the act with his pads as the first line of defence.