Instead, India will stick to geopolitically less sensitive separate naval manoeuvres with the US and Japan.
US and Japanese naval officials visited India last month to discuss coordination for the trilateral exercise.
The Indian defence ministry first indicated a preference for holding the exercise off the coast of the Japanese island of Okinawa.
Then it took the view that war games should be kept to the bilateral level for the time being in deference to Chinese sensibilities. The ministry then withdrew from the discussion altogether.
"Bizarrely, the US and Japan discussed a naval exercise on Indian soil that India was boycotting," said a US defence consultant.
Beijing claims multilateral naval exercises between India, the US and Japan are aimed at containing its influence and has publicly warned all the governments against joining such exercises.
Australia's withdrawal from the Quad after 2007 was a fallout of these protests.
The US and Japan had hoped to give the Malabar label to the Guam exercises, echoing the 2009 Malabar naval actions.
Tokyo saw this as paving the way to recreating the so-called "Quad" naval exercise of 2007 which saw five navies participate.
Australia last year indicated its interest in rejoining. Indian officials say that they are only interested in bilateral naval exercises and that Malabar should be confined to exercises with the US in the Indian Ocean.
This year's Malabar exercise, if held at all, will be a bare bones Indo-US affair in the Arabian Sea later in November. Officials say even this may not happen as both governments keep pushing the date back.
"The dates of Malabar are still to be finalised and depends on the commitments of the Fifth Fleet's engagement in the Gulf," said an Indian Navy official.
The Indian withdrawal from the trilateral exercise occurred before the Chinese border intrusion in eastern Ladakh.