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In this paper, the influence of mode loss on the feasibility of grating-assisted optical fiber surface plasmon resonance (SPR) refractive index (RI) sensors is investigated. The loss of surface plasmon polarition (SPP) mode plays a key role in the design and implementation of such sensors. It is demonstrated through simulation that the grating length should be smaller than or comparable with the propagation length of SPP mode in order to achieve effective coupling. The loss of SPP mode is the severe limiting factor for the implementation of the grating-assisted SPR-RI sensors. More generally, in order to achieve effective mode coupling with the help of waveguide grating, the grating length is bounded by the shortest propagation length of the modes in lossy waveguides.