The Indian finished at four-over for 36 holes, ending his challenge for the week.
England's Lee Slattery shot a six-under 66 to reach 11-under in windy conditions and go one shot ahead of Ryder Cup player Italian Francesco Molinari and Spaniard Eduardo De La Riva.
Slattery lost his card by only 77 euros in 2007 and is now 136th on The Race to Dubai and faces another tense finish to the season.
WGC-HSBC Champions winner Molinari had carded a five-under 67 with six birdies and a solitary bogey.
Overnight leader and 2009 champion Ross McGowan followed his blistering opening 64 with a level-par 72 to remain eight-under, with world number one and defending champion Luke Donald among those on six-under.
Early exit from Madrid for Shiv Kapur
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