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In your instant pot, switch on the saute mode and add the cubed capsicum / cubed onion slices and saute for 2 minutes in high heat with little salt so that they are cooked but still crunchy. Set it aside. (Non IP users can do it a normal kadai as well and follow the same steps)
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Now add the oil + butter (omit butter if vegan). When it becomes hot, add the whole spices (cinammon, cardamom, bayleaf, badi elaichi, and cumin seeds) and slit green chillies. Let the spices roast and becomes fragrant.
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Now add the finely chopped onions and saute until nice and brown in normal heat. ( I do not use high heat because they burn quickly) Make sure you saute the onions patiently because that gives you the sweet caramelized flavor.
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Now add the ginger garlic paste and saute for a minute.
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Add the yogurt, spice powders ( coriander, turmeric, cumin, chilly powder) and saute for 3 to 4 minutes. Make sure it does not burn. (Beat the yogurt to a smooth consistency before you add it to the pot)
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You will see the yogurt has thickened up. Now add the tomato puree and saute for 3 to 4 minutes in high heat. When you see the oil coming from the sides of the pan, add the besan, garam masala, salt and mix well. Saute for a couple of minutes, making sure the besan has not formed into lumps.
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Now add water (or milk/ cream) to thin the gravy, the paneer/ tofu cubes and sauteed onions and capsicum. Give everything a mix and let it simmer in low heat for couple of minutes.
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Lastly add some crushed kasuri methi and serve hot with rotis/ parathas.