Bahrain now needs to beat Australia in their final Group C match to qualify for the quarterfinals.
Australia and South Korea lead the group on four points after their 1-1 draw at the Al Gharafa Stadium, with Bahrain third on three and India without a point.
The only sour note for Salman Shareedah's side was the needless red card for goal-scoring midfielder Faouzi Aaish who was cautioned twice in quick succession, the second for diving in the penalty area after 62 minutes.
Despite the defeat India, 144th in FIFA's world rankings, the lowest of the 16 sides here, will take a lot of heart from their display in an entertaining game full of defensive mistakes.
Bahrain opened the scoring after eight minutes from the penalty spot when Indian captain Climax Lawrence brought down Aaish, who stepped up to convert his second penalty of the tournament.
The Indians did not drop their heads and were level with their next attack when Gouramangi Singh was on hand at the back post to convert striker Abhishek Yadav's knockdown.
The equalising goal drew a deafening roar from the passionate India fans who made up most of the 11,032 crowd.
Their enthusiasm was dampened when Bahrain regained the lead through Abdulatif's simple tap-in after 16 minutes following a mistake by goalkeeper Subrata Paul.
Abdulatif scored his second three minutes later when he converted Nigerian-born strike partner Jaycee John's cross. He completed his hat-trick 10 minutes before halftime when he chested the ball down before slotting a left-foot shot past Paul.
India pulled a second goal back when Sunil Chhetri headed in from close range after Renedy Singh, with a blistering strike, and Yadav, with a header, crashed efforts against the crossbar.
Aaish was then dismissed and India pushed for a third but Abdulatif claimed his fourth and Bahrain's fifth when he drilled a right-footed shot from the edge of the area in to the corner of Paul's goal.
