The second Formula E race in India was due to take place on 10 February but the staging of the event was cast into doubt last week after the championship acknowledged it was "seeking urgent clarification" after receiving a letter sent by the new Government of Telangana that "could impact the Hyderabad race".
It was officially confirmed on Friday by the championship that the race would not be taking place, citing "a decision by the Municipal Administration and Urban Development Department (MAUD), under the control of the Government of Telangana, not to fulfil the Host City Agreement".
It added that it was also "left with no choice other than to formally give notice to MAUD that it is in breach of contract".
Alberto Longo, co-founder and chief championship officer of Formula E, said: "We are extremely disappointed for the huge motorsport fanbase in India.
"We know that hosting an official motorsport world championship race is an important and prestigious occasion for Hyderabad and the whole country.
"The President of the Federation of Motor Sports Clubs of India (FMSCI), Akbar Ebrahim, and his team have been incredibly supportive in bringing Formula E back to Hyderabad.
"They share our disappointment in the decision of the Government of Telangana which means that will not happen.”
The race was due to be held at a street circuit located next to the Hussain Sagar lake in downtown Hyderabad, where last year's inaugural race had already been staged.
It is understood that the new Government of Telangana, which was elected last year, was formally opposed to the staging of the 2023 race prior to coming into office.
Jeff Dodds, CEO of Formula E, added: “It is deeply frustrating that we cannot build on the success of the inaugural race last year, which delivered almost 84m USD in positive economic impact to the region.
"We are also disappointed for our major Indian partners, particularly Mahindra and Tata Communications.
"Racing in Hyderabad was important to showcase the benefits of adopting electric vehicles in a market where pollution from vehicle engines has a massive impact on public health and the environment.”
It is understood that no new venue will fill the now vacant slot of the cancelled race for the upcoming season, which gets underway in Mexico City on 13 January, meaning there will be a gap of almost two months between Diriyah (26-27 January) and Sao Paulo (16 March) as the calendar reduces to 16 races.
