Deseed about 70% (or as per spice preference) of dried kashimiri chillies. Also, discard the membrane of the chillies. Soak dried chillies in about 3 cups of hot water for about an hour.
Strain the water, grind the red chilies to a smooth paste, add water little at a time if required.
Heat oil in a deep bottomed pan. Add minced garlic & ginger, sauté on medium-low heat until it turns golden brown and the raw smell is gone. Add finely chopped onions, sauté until translucent.
Now add the red chili paste, mix well. Keep stirring continuously on medium heat until the mixture leaves oil.
Now add tomato ketchup, soy sauce, sugar & vinegar. Season with salt and pepper. Add 1/2 cup water. Mix everything well until it starts leaving oil. Taste for seasonings, adjust with more salt, sugar or vinegar.
Storage: Let the sauce cool down completely, transfer it into a sterile glass container. Refrigerate it for 2-3 weeks. Use a clean, dry spoon each time you use the sauce.