@akash warkhade Thank you for reaching out to Microsoft Q&A. Based on your statement, you have set up API Management in non-VNET mode and when integrating with private endpoint (Kubernetes service) as backend for APIM, faced the above error. Please clarify if my understanding is incorrect.
Assuming the above statement is true, this is expected since private endpoint (preview) only supports incoming traffic to API Management instance and unfortunately, outbound traffic is not possible at the moment. Our product team is currently working on this feature and no ETA as of now yet. Please refer thread for similar discussion and follow https://aka.ms/apimupdates for any latest updates on the feature.
Alternatively, consider VNET integration for now for hosting backend in VNET. If you like to share feedback directly with our product team, feel free to submit a request via Azure Feedback page. I hope this answers your question and feel free to add a comment if you have any other questions. We would be happy to assist you.
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