The 23-year-old from Assam, who started her career as a Muay Thai practitioner, thus became only the third Indian boxer to win a medal at the showpiece after Vijender Singh (2008) and MC Mary Kom (2012).
In their first-ever meeting, Surmeneli, also 23, dominated the bout, and subjected the Indian boxer to two standing counts.
"It is unfortunate. Her dream to win a gold medal has remained unfulfilled," said her father Tiken Borgohain moments after learning she had lost.
"I didn't watch," he said. "She has time on her side, she can rectify the flaws and carry on," he said.
He, however, said he was happy that Lovlina had won the bronze medal in Olympics in her first appearance.
"We are happy and will celebrate when she comes back home," he said adding he would go to Guwahati to receive her.
Up against a technically sound opponent, Borgohain was completely out-punched by the gold medal favourite, who produced a thoroughly dominating performance.
The Assam boxer also coped a one point deduction in the second round for not paying attention to the referee's instructions despite a couple of cautions.
The Indian's start was not all that bad as she stood up to the strong challenge but she came undone after Surmeneli got down to connecting her vicious hooks and body shots.
The third round was especially punishing for Borgohain, who faced two standing eight counts during the bout.
Nonetheless, Borgohain goes home a history-maker.
Hers is also the first Olympic medal in Indian boxing in nine years.
Surmeneli is also 23 and has collected two gold medals this year internationally.
The former middle-weight (75kg) boxer claims to have promised an Olympic medal to Turkish President Recep Tayyip Erdogan back in 2015 itself.