The government, the Bangladesh Cricket Board and some national players met on Thursday, a deadline set by the International Cricket Council for a final decision.
"It is the government's decision not to play in India due to security concerns," Bangladesh sports adviser Asif Nazrul reported after the meeting.
Bangladesh previously asked to switch venues from India to tournament co-hosts Sri Lanka for security reasons, but the ICC rejected the request this week, said there were no known security threats, and Bangladesh would be replaced by Scotland.
The T20 World Cup starts on February 7 and Bangladesh are scheduled to play that day against the West Indies in Kolkata.
Strained political relations between India and Bangladesh meant that the Tigers' fast bowler Mustafizur Rahman was removed from Indian Premier League by order of the Board of Control for Cricket in India.
That led the BCB to ask the ICC to shift the team's World Cup games to Sri Lanka.
Bangladesh are scheduled to play three group C games in Kolkata and a last group game in Mumbai.
"The security threat is not a theory, it is a real incident," Nazrul said. "The BCCI bowed down to pressure from fundamental groups, and kicked Mustafizur out of their tournament."
Nazrul claimed the ICC couldn't convince Bangladesh that their team would be safe in India and "only talked about the standard security plan, rather than address our specific grievance."
Nazrul said there was no "scope" for changing Bangladesh's stance because India didn't communicate with Bangladesh on the Mustafizur issue.
Pakistan are already scheduled to play all of their group games in Sri Lanka — and beyond if they advance — because of political tensions with India that brought both countries to the brink of war last year.
"There are many instances that the venue has been changed due to security risks," Nazrul said.
"We didn't get justice from the ICC, they are still not allowing us to play in Sri Lanka. We are hopeful the ICC will take into account our genuine concern, and give us the opportunity to play in the World Cup."
The ICC has said Mustafizur's removal from the IPL was unrelated to the T20 World Cup.
"This linkage has no bearing on the tournament's security framework or the conditions governing participation in the T20 World Cup," the ICC said in a statement on Thursday.
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