The Indian team of John Anoorup, V K Elakkiya Dasan, J Debnath and Amiya Kumar Mallick finished the race ahead of Korea in a photo finish but was later disqualified to the horror of the host country.
It was a smooth race for the Indians till the first and second leg but the problem occurred during the exchange of baton between Debnath, who ran the third leg and Mallick.
The Indians were running in the third lane while the Koreans were on the fourth lane in th second heat.
The Korea team was declared to have won the heat in 40.18 seconds. The other heat was won by China in a fast time of 39.06 seconds.
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Chinese Taipei qualified for the finals with the second best timing of 39.40secs while Thailand had the third best time of 39.48 seconds.
The Indians were not the favourites in this event but could have pushed themselves for a bronze in front of the home crowd.
In the other event of the morning session, Anu Raghavan, Jauna Murmu and M Arpitha qualified for the women's 400m hurdles finals.
Juana (57.96secs) and Raghavan (58.26secs) finished second and third behind Vietnam's Nguyen Thi (57.34secs) in the second heat while Arpitha was third in the first heat in 1:00.05.
The top Japanese in the contest, Sayaka Aoki, who has a season's best of 56.32secs, came in fourth in a quick heat number one and qualified as one of the fastest losers.