A regular routine trade facilitation engagement has escalated into a cross-border investigation. An Ahmedabad-based firm is under the scanner for an alleged international trade fraud.
According to reports, it has caused losses to the tune of almost $1 million to the South Korean government. The firm has reportedly dodged customs duties in India.
The matter has been brought to the attention of Indian authorities by the Korea Trade-Investment Promotion Agency (KOTRA).
KOTRA has filed detailed complaints with Customs, the Enforcement Directorate (ED) and the Directorate of Revenue Intelligence (DRI).
The report also mentioned that KOTRA has indicated that the organisation has links with several India-registered companies and their overseas affiliates in China, South Korea and Hong Kong.
Officials involved in the probe have flagged the creation of fake import chains in which fully finished goods were allegedly imported into India, rebranded and sold as domestically manufactured products.
KOTRA officials were quoted as saying that the Ahmedabad businessman had registered with the agency in 2020-21 as a genuine importer of Korean goods, but later, in collaboration with Chinese partners, allegedly established a shell company in South Korea claiming to manufacture two products.
Subsequent investigations reportedly revealed that the South Korea-based entity had no manufacturing infrastructure and was instead importing goods from China.
The Ahmedabad firm is accused of placing import orders through this shell entity, enabling it to claim duty-free benefits under the India-Korea Comprehensive Economic Partnership Agreement.
In parallel, the South Korean government’s export subsidy scheme for small businesses was allegedly exploited by routing Chinese-origin goods through Korea and presenting them as Korean exports to India.
The alleged dual fraud is believed to have continued from mid-2024 to mid-2025, until Korean authorities noticed that the newly incorporated company was consistently securing export orders worth thousands of dollars every month despite having no visible manufacturing capacity.
Officials told a national daily that the unusually high volume of export orders triggered suspicion. Investigations confirmed the absence of any production unit, following which the company’s bank accounts were frozen.
Investigators have also alleged that invoice values were inflated to siphon funds to China and Hong Kong. Multiple entities were reportedly set up in Gujarat to carry out circular trading, artificially inflate turnover figures and enhance eligibility for bank loans. Misclassification of imported goods to evade customs duties in India has also been alleged as part of the scheme.
In Gujarat, the company held a license to manufacture solar inverters. However, officials said inspections at the registered address revealed only an office, with no manufacturing facility in operation. Finished goods were allegedly imported through associated firms, rebranded locally and sold with Indian labels.
KOTRA officials said the episode has come as a shock, given the agency’s otherwise positive experience with Gujarat-based companies since it began operations in the state in 2019, adding that all findings from the investigation have been shared with Indian authorities for appropriate action.
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