Playing her fifth straight tournament, Sindhu, who had a 3-7 head-to-head record against Tai before the match, never lacked in fitness and fought throughout the match before going down 18-21, 18-21 to the defending champion in a 44-minute women's singles final here.
This is Sindhu's second loss in the four finals that she reached this season. She had lost to Japan's Nozomi Okuhara at the World Championship final, while clinched two titles at India and Korea this year.
In the opening game which lasted 21 minutes, Tai moved to a 3-0 lead early on before Sindhu made a good judgement at the baseline to log the first points.
However, Tai unleashed her wide repertoire of strokes and varied the pace well to lead 7-2.
Sindhu then started to dominate the rallies by using her deep clears and drew the Taiwanese close to the net. She used her reach to catch the shuttle early and placed it in difficult positions to narrow the deficit to 6-7.
A deceptive net return gave Tai a point. The Taiwanese then produced a smash on the deep backhand corner of Sindhu and moved to 10-7. Sindhu unleashed a body smash to perfection before Tai's flat straight return bamboozled the Indian.
At the break, Tai had a three-point advantage.
Once play resumed, Sindhu tried to anticipate her deceptive rival and put Tai in awkward positions a few times, but she hit long or at the net to allow the Taiwanese lead 18-14.
A gritty Sindhu, however, kept breathing down her neck and soon clawed back at 18-18.
During the next rally, the string of the Sindhu's racquet broke and Tai unleashed a smash which left the Indian frustrated. Tai produced another smash on Sindhu backhand to move to game point. She then grabbed the opening game after winning a video referral when her shuttle landed on the line.
In the second game, Sindhu was left to deal with some indecision due to the sidewise drift which gave early advantage to Tai but the gritty Indian levelled the score at 4-4 with a superb return at her rival's forehand.
The duo moved to 7-7 before Tai hit wide and lost a referral too.
Sindhu produced a overhead backhand flick, a deceptive return at the forecourt and another smash to move to 10-7 before entering the lemon break with a two-point advantage when Tai found the net.
However, Tai dominated the proceedings after the interval, despite a fighting Sindhu trying to snap at her heels.
Another weak return by Sindhu and Tai was leading 18-12. The Indian produced a cross court smash to break the rhythm, but she again hit long.
Sindhu saved two match points before a perfect drop shot from Tai sealed the title for the Chinese Taipei shuttler.
Former badminton world number one Lee Chong Wei clinched the Hong Kong Open on Sunday by defeating Olympic champion Chen Long 21-14, 21-19, defying expectations that the all-time great may be reaching his end.
China's Chen, who beat world number one Viktor Axelsen of Denmark to win the China Open for a fourth time last week, was stunned by 35-year-old Malaysian Lee, whose world ranking has fallen as he approaches the latter stages of his career.
Lee's triumph came at a time when his old nemesis Lin Dan of China suffered defeats in the China Open and the quarterfinals in Hong Kong earlier this week.