From 174-0, Hong Kong lost their way and huffed and puffed past the 250-run mark, eventually India won by 26 runs.
Hong Kong will look to raise their game against defending champions India in Dubai on Tuesday.
Pakistan starts the tournament with a thumping 8 wicket win over Hong Kong in Dubai on Sunday.
Pakistan and Hong Kong have faced off in a One-Day International only twice - in 2004 and 2008.
Malaysia lost 7 wickets en route their 162-run chase.
Fast bowling all-rounder Haroon Arshad and leg spin bowler Jhatha Subramanyan new faces in 16-men squad.