Based on the book of the same name by Alex von Tunzelmann about the last days of Britain's colonial rule in India, the film got in trouble after the Indian government voiced concerns over the plot.
Officials demanded copy approval of the script and eventually gave the film the green light, but the project continued to be plagued by money problems, with bosses at Universal Studios reportedly fretting over the estimated $30-40 million cost.
Imdb.com reports that the studio executives have confirmed the project has been scrapped.
Director Joe Wright says the wrangling with the Indian government effectively sealed the film's fate.
"We were in between a rock and a hard place. The Indian government wanted us to make less of the love story while the studio wanted us to make more of the love story, " he told Variety magazine.
Cate Blanchett was roped in to play Edwina in the movie.