The Black Sticks had some good chances to attack, albeit limited, but the execution wasn't quite there when they did venture up the field or from their penalty corner opportunity.
They weren't helped by losing Katie Doar for a couple of minutes to a green card, but the match remained without a goal as the sides went into the quarter-time break.
The Black Sticks made a better start to things in the second quarter with some more shape and intent in their attack, but they were still unable to execute when they looked to move into an attacking position.
India continued to flow and frustrate the New Zealanders and finally scored the opening goal with about a minute to go in the half.
Needing to get things going after the break, the Black Sticks had a brief advantage when India temporarily went a player down to a green card but they couldn't take advantage of that.
However, they appeared to hit back midway through the third quarter when Merry got her stick on the end of a ball into the circle and guided the ball past the Indian goalkeeper. However, upon review, the goal was ruled out as a free hit in the lead-up to it had been deemed not to have travelled the required 5m.
It was a blow to the New Zealand hopes, but they appeared buoyed by seeing the ball go past the goalkeeper and continued to work hard to try and make something happen.
Their best opportunity to level the game came early in the final period when the Indian goalkeeper deflected the ball into the path of Olivia Shannon, who trapped it nicely but was unable to keep her shot down and saw it sail above the metal frame of the goal.
India had a player yellow carded for cynical play with just under three minutes to play which gave the Black Sticks a numbers advantage again.
It came down to the final 20 seconds, but the Black Sticks kept playing and earned a penalty corner. They didn't score from it, but a kicked ball by India saw them awarded a penalty stroke, which Merry slotting to force a shootout.
That was where the celebrations ended for the New Zealand side, however, as they return home from Birmingham without a medal.