The Board of Control for Cricket in India (BCCI) said the scheduling of the tournament in October severely reduced the revenue it could generate.
India have complained that the scheduling of the event means they have to limit the number of Tests and one-day internationals they can host.
Instead, the BCCI revealed plans to host Australia during October for the next three years from 2007.
This year's Champions Trophy takes place from October 7 to November 5.
The 2008 event would likely be scheduled around similar dates, so an Australian tour of India would in theory deprive the event of two of its most important nations.
The Champions Trophy - a one-day international tournament in addition to the four-yearly World Cup - was launched in 1998 to help raise funds for the International Cricket Council's (ICC) development projects.
