The Indian Davis Cup team was relegated to World Group 2 for the first time after a 2-3 loss to Denmark in their away fixture earlier this month.
The 25-year-old Nagal dropped serve in the very first game of the match, but once he got hold of his nerves, he was his usual fighting self.
India had blanked Denmark 4-0 in Delhi in March 2022 but the presence of 19-year-old Rune makes it a very different proposition.
The tie levelled at 1-1, India needed to win the doubles, but the pair of Yuki Bhambri and Rohan Bopanna lost 2-6 4-6 in just 65 minutes to the home team combo of Rune and Johannes Inglidsen.
Rune converted four of the seven break chances while the Bhambri did not get a single chance to break his opponent.
The International Tennis Federation is ending its Davis Cup partnership with the private investment group fronted by former Barcelona soccer star Gerard Piqué, which helped revamp the storied competition in 2018.
Rune-Ingildsen pair made short work of the Indians winning 6-2 6-4 in just 65 minutes.
Sasikumar Mukund, Prajnesh Gunneswaran, Ramkumar Ramanathan, Rohan Bopanna and Yuki Bhambri were picked for the tie while Sumit Nagal was named as the reserve.
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Earlier in the day, Frances Tiafoe had lost his match to Lorenzo Sonego. Italy is playing without its top two players Jannik Sinner and Matteo Berrettini.
Sonego hit 17 aces during his Davis Cup match victory against Tiafoe.
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On day one, both Ramkumar Ramanathan and Prajnesh Gunneswaran had lost their respective singles matches by identical margins.
Germany and Australia advanced from Group C after the Germans beat Belgium 2-1, while Italy defeated Argentina 2-1 in Bologna in Group A.
Prajnesh Gunneswaran, ranked 335 in the world, faces a tough job against world number 2 Casper Ruud, who has been in red hot form.
The other members of the squad are Sumit Nagal, Ramkumar Ramathan, Prajnesh Gunneswaran, Yuki Bhambri and Mukund Sasikumar.
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India are one of the seeded teams (25th), but Norway have world number 8th Casper Ruud, who lost to Rafael Nadal in the French Open final.
Former Indian tennis player and actor Vijay Amritraj is now a subject of a documentary directed by Oscar-nominated filmmaker Sami Khan.
Since Russia began its attacks on Ukraine in February, Russian athletes have been prevented from taking part in many sports.
Serbia and Spain have been drawn in Group B of the Davis Cup Finals. Canada and South Korea are the other teams in the group.
There had been speculation that Abu Dhabi would be the new host for the Davis Cup Finals but teams had expressed concerns.