Indian grappler lost 0-10 against Iran's Hassan Yazdani in the men's freestyle 86kg final.
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Punia, a Commonwealth Games champion, failed to add another gold to his tally but bagged the silver medal. Yazdani, meanwhile, defended his Asian Games title, winning all his fours bouts on technical superiority.
En route to the final, the 24-year-old Punia defeated Bahrain's Magomed Magomed R Sharipov, Indonesia's Randa Riandesta, Shota Shirai of Japan and Javrail Shapiev of Uzbekistan on his way to the gold medal bout.
Punia's silver is the first by an Indian wrestler in Hangzhou. Sonam Malik, Sunil Kumar, Kiran Bishnoi and Aman Sehrawat won the bronze medal. The 2018 Asian Games champion Bajrang Punia failed to defend his title as he failed to clinch a medal.
