Woakes was picked up by Delhi Capitals for £160,000 at the tournament draft in December but has opted to pull out in a bid to keep himself fresh for the international summer.
It is understood Woakes has informed the franchise of his decision and they have begun to search for an overseas replacement.
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The 31-year-old seam-bowling all-rounder played a key role in England’s historic World Cup success last year and also went on to play four of the five Ashes Tests.
He has since toured New Zealand and South Africa over the winter and is currently preparing with the squad ahead of two Tests in Sri Lanka.
The prospect of heading straight from Sri Lanka to India for a competition that runs for almost two months – as the likes of Ben Stokes, Sam Curran and Jos Buttler are expected to do – brought about second thoughts and he has instead prioritised keeping fresh for another busy programme at home.
England players selected for the first Test of the summer, against the West Indies at the Oval on June 4, are required to be back by May 26 and the IPL final is scheduled for May 24.
The windows are tight and the physical demands heavy, with Woakes also mindful about managing a longstanding knee complaint.
He has not played an official Twenty20 since August 2019 but his consistent success in 50-over cricket meant he remained in demand.
He will now head back to Warwickshire and is likely to tune up his red-ball skills in the early county fixtures with a view to retaining his place in the first squad of the domestic campaign.