EI has affected more than 400 horses on 53 Australian properties, with nearly 50 horses confirmed as carrying the disease.
The Asian-Pacific Challenge Trophy is part of the Bates Sydney International three-day event, which was scheduled to run from Sep 13 to 16, and was set to host over 160 horses along with 18 riders from India, Indonesia, Japan, Malaysia and Thailand.
The event is an important stepping stone for individual riders and horses qualifying for the 2008 Olympics.
Meanwhile, the Tamworth Dressage Championships was cancelled Sunday, in which a group of Indians were scheduled to participate. Ten top Indian showjumpers and dressage riders chosen by the Equestrian Federation of India were training for the past three weeks at Carroll's Ranch at Anambah in New South Wales, the state most affect by EI.
As dressage rider Lt Col Sunil Shivdas says, "Fortunately, the equine flu has come at the fag end of our course. We are flying back to India on Wednesday.
Despite not being able to take part in important competitions, the riders are happy with their training. "In India, we have good horses but we lack coaching. Here, we have got the feel of riding superior horses. The course package in Australia is also reasonably priced at Rs.35 lakh (Rs.3.5 million) compared to European countries," Shivdas says.
He is here with four colleagues from the 65th Cavalry, the world's only horse regiment used for ceremonial and equestrian support.
"It has been a very rewarding experience," says professional rider Jay Rathore, who hails from Udaipur and spends his time in Germany, Britain and India. He has attended six courses in Australia during his 10-year career.
The riders are here to train with their colleagues in Anambah and take part in a variety of competitions in Maitland, Tamworth and Sydney.
Sharon Carroll, owner of Carroll's ranch, who has recently returned after competing at the Delhi International Dressage Festival as a member of the three-person Australian team, said: "The Indian riders are very committed to the training. They have natural skills and the training has added to their experience and confidence."
Eighteen-year-old showjumper Aliya Dasgupta, a student of Mount Carmel College in Bangalore, says: "It has been an amazing exposure. We have received high-level specialist training. The horses we are riding are very different to what we are used to, which makes it a little bit harder, but we have certainly learnt a lot."
Aliya, who started horse riding at the age of eight at the Princess Academy of Equitation in Bangalore, has already planned to spend her next summer vacation training here. Her trainer at the ranch, Jamie Coman, was part of the Australian team at the 2000 Sydney Olympics and former Australian National Showjumping coach.
Carroll, who had some Indian riders training at her ranch last year as well, says: "This sport is a little bit younger in India. It is good for them to come here for elite level training. I would like to pursue a training course for them every year. This is a package I've organised with the Equestrian Federation of India and the Indian Government. The riders compete in a couple of events, participate in day-to-day training and gain exposure to our methods.
"Our students gain the opportunity to observe how different riders from different countries ride, how they approach their horses and how they handle them. It's also great motivation for our junior riders to see high-level international riders."
Eight of Carroll's 30 horses are stuck at the Tamworth Dressage Championships, which went into lockdown on Saturday afternoon. An equine scientist, Carroll urged horse owners to stay calm.
She said, "I think what we're looking at is an incredibly virulent strain of influenza, something that's managing to spread very fast and is very contagious. All our horses in Australia are very susceptible because we don't have it here, so as soon as they're exposed to it, they're coming down with it very quickly because there's no immunity to it."
Equine flu is usually spread by direct contact between horses, but can also be spread by contaminated humans, vehicles or bedding and feed material.
An indefinite ban has been imposed on horse movements and race meetings as the country comes to terms with the EI outbreak affecting livelihoods of at least 60,000 people and costing millions.