Sandwell & Birmingham Mela was due to take place in Victoria Park, Smethwick next Saturday and Sunday.
But organisers have pulled the plug on the event, which attracts thousands of people each year, after struggling to get performers over from India due to travel disruption.
India was red-listed by the UK Government up until earlier this month when it was moved to amber.
People travelling from red-listed countries are told they must self-isolate for 10 days in a Government-approved quarantine hotel.
The Mela has been rescheduled for the weekend of August 27 and 28 next year.
A spokesman for the festival said: "We have made the difficult decision to move the Sandwell & Birmingham Mela to next year’s August Bank Holiday weekend.
"Despite all restrictions for events being removed on July 19, as per the Government's four step plan, we have continued to face difficulties in the current climate and through the ongoing pandemic.
"Our 2021 planned talent was due to come from India and with the red list restrictions this would have made it impossible to deliver a quality event.
"Coupled with the difficulties we have faced securing critical suppliers as the event industry tries to get back on its feet, we feel its appropriate and our responsibility as organisers to wait for the situation to settle down.
"We hope to see you at Victoria Park, Smethwick on 27 to 28 August, 2022."
The festival would have been in its 10th year, this year.