There was a fierce start to the match as both sides pressed on the attacking button.
But it was Manipur who appeared to have the cutting edge as Khanthang Paite tested the Punjab goalkeeper in the sixth minute but his shot went just past the frame of the Punjab goal.
Four minutes later Subhash Singh came close for Manipur but was flagged offside.
Manipur continued to press themselves upon Punjab as Joychandra Singh's shot from just outside the Punjab six-yard box went over the crossbar.
That was in the 14th minute.
Two minutes later, though, Balwant Singh came close to gifting Punjab a shock lead when he took a shot but it was off target.
The Manipuris weren't quietened down by Punjab at all by that and Subhash Singh again went close when he took a lovely left-footed shot from outside the Punjab penalty area from the left side but it went just wide off the near post.
This chance for Manipur came in the 23rd minute.
Two minutes later Subhash had another chance, this time with his head, but his header went way over the crossbar.
But it was Punjab who took the lead much against the run of play when Balwant Singh headed home from a long ball from the midfield.
The Manipur defenders thought that Singh was in an offside position and so didn't chase him but replays showed that the assistant referee was right not to have raised the offside flag.
But Manipur were not to buckle down by going 1-0 down.
Paite had a chance from a free-kick as he curled the ball with his left foot but Punjab goalkeeper Karanjit Singh was up to the mark and fisted the ball over his crossbar for a corner.
Two minutes later on the half-hour mark Manipur restored parity.
The Manipuris took a corner which was apparently cleared away from danger by the Punjab defenders only for the ball to fall at the feet of Raju way outside the Punjab penalty area.
Raju took a long range attempt which was deflected into his own net by Sarbjit Singh.
It became 1-1 at that point.
Manipur appeared to be the better of the two sides for the rest of the first half and went ahead three minutes into the restart.
Paite ran with the ball from the midfield and took a left footed shot from outside the Punjab penalty area which custodian Karanjit Singh couldn't hold onto and Subhash Singh slotted the ball home from close range to give Manipur a 2-1 lead.
The next few minutes saw both sides go for the kill but neither managed to open their opponent's defence.
Punjab defender Rakesh Masih came close in the 55th minute but his shot went way over the Manipur crossbar.
The match then slightly dipped in momentum with Manipur playing more passing football and retaining possession.
They could have increased their advantage in the 69th minute when Joychandra Singh crossed in the ball from the left to an unmarked Reisangmi Vashum inside the Punjab penalty area.
But Vashum failed to keep his shot on target.
Both Punjab and Manipur had their chances after that and either side could have scored.
Manipur looked the more technical side and played some lovely one touch football and should have scored at least once from the number of chances they created.
But Manipur held on for a deserved 2-1 victory that takes them one step towards the semi-finals.
Later, rusty Bengal were lucky to escape with a 1-1 draw against 10-man Tamil Nadu in the other Group A quarter-final league match.
Twenty-nine times champions Bengal needed a goal deep into stoppage time to grab a point after PC Riju gave the hosts the lead in the 40th minute.
Bengal goalkeeper Subhasish Roy Chowdhury bungled while collecting a long throw-in from Pradeep Kumar and Riju, who was near at hand, put the ball into the net.
Bengal equalised in the third minute of second-half added on time.
Tamil Nadu goalkeeper Satish Kumar deflected Habibur Rehman Mondal's volley from a Snehasish Chakraborty's corner on to the path of PC Lalwmpuiya, who headed it home to earn Bengal a point.