Deepika Thakur scored the winner in the 60th minute as she slammed home a penalty corner rebound to trigger celebrations in the Indian camp.
Deep Grace Ekka had given the Indians the lead in the 13th minute but Zhong Mengling pulled China level in the 44th minute.
India were playing in the final for the second time in the tournament that was being held for the fourth time.
India had lost to China in the round-robin stage and having learnt from their group stage encounter, they refused to let the latter take early control of the ball.
They closed them down high up the pitch, often intercepting their passes and constantly putting pressure by hunting in packs.
When in possession, the Indian eves held their nerve, relentless and in control, they passed the ball around neatly and quickly to penetrate China’s circle.
This slightly different approach to their game compared to Friday’s show helped them earn India’s first penalty corner in the 13th minute. An innovative set-piece saw Deep Grace send the ball past the Chinese keeper to make it 1-0.
Going into the second quarter, India kept up the pressure by playing disciplined hockey, keeping their calm only to deny the Chinese a chance to equalise.
However, the third quarter saw China’s Mengling penetrate the Indian circle to score a quick field goal. But the Indian eves were not affected by the equaliser and kept their cool.
China managed to earn their first penalty corner of the match in the third quarter but failed to convert sending the ball way off the baseline.
With the game locked 1-1, neither team dropped the intensity going into the fourth quarter.
For India, Rani Rampal earned a penalty corner with just seconds left before the final hooter. Deepika, the highest goal scorer of the tournament took the onus on to herself to convert a sensational goal, with the Indian supporters cheering.
Hockey India (HI) announced a cash prize of Rs 2 lakhs (around $2994) for each player and chief coach Neil Hawgood.
Besides this HI also announced Rs 1 lakh (around $1497) for the other support staff of the team. A prize of Rs 1 lakh was announced for Deepika.