Soak cashews in ½ cup of water for 1–2 hours. Grind in blender or mini chopper with soaking water into a smooth milk. If you didn’t have time to soak, you can still make the paste. It just won’t be quite as smooth. Set aside until needed.
Peel the ginger and garlic, and finely chop with a knife. Set aside until needed.
Slice your green chiles on the diagonal. Set aside until needed.
Chop paneer into ½-inch cubes and set aside until needed.
Make the tikka masala sauce
Heat ghee or butter in a medium saucepan on medium heat. Add bay leaves and sauté for 10–15 seconds, or until you can smell the aroma.
Add the garlic and ginger, and sauté until it is just starting to brown, about 1–2 minutes.
Add the tomato puree, red chili powder, and salt, and stir well. Simmer until the fat starts to separate from the tomato and an oil sheen develops on the surface (about 5 minutes). If the tomato gets too thick, add water.
Add the cashew milk, green chilis, and water, and stir well. Simmer until the masala begins to thicken, about 20 minutes.
Sauté the paneer
Meanwhile, sauté the paneer cubes in vegetable oil in a medium skillet. The paneer will release some liquid at the beginning. Careful once the liquid dries up, as the paneer will burn easily. Turn frequently to brown the paneer, and then set it aside until the masala sauce has thickened.
Add the paneer cubes to the tikka masala sauce and cook for 2–3 minutes. Do not overcook at this stage, as the paneer may harden if overcooked.
Finish the paneer tikka masala
Add kasoori methi and garam masala. Stir, taste, and make a final adjustment for salt. If you feel it needs it, add a little bit of raw organic sugar to balance the flavors.
Garnish with fresh chopped coriander leaves.
To serve
Serve paneer tikka masala hot with an Indian flatbread (such as naan) for dipping, and/or basmati rice.
Notes
Paneer & substitutions
Paneer can be purchased online, or at an Indian store. I have seen it at Whole Foods, so it may also be available at other organic or natural foods stores in your neighborhood.Paneer does not melt like other cheeses, so there is no other cheese substitute. If you do not have paneer, try using tofu, or substituting a vegetable instead, such as cauliflower, carrots, green beans, squash, or peas.
Indian red chili powder
If you do not have Indian red chili powder, substitute an equal amount of cayenne powder. A second option is to substitute with chili flakes.If you do not have green chilis, use an equal amount of fresh jalapeño pepper. The spice levels are very similar. Alternately, the more widely available Thai chiles are a good substitute.
Kasoori methi
If you do not have kasoori methi, substitute with celery leaves, or something bitter, such as a bit of radish or dandelion greens.
Caution on green chilis
Be mindful of the four large pieces of green chiles in the paneer tikka masala. Remove them before serving if possible, or warn others. If this chili gets bitten into, it will be spicy.For more details, visit my Guide to Indian Ingredient Substitutions.
Make this vegan!
If you want to make this recipe vegan, substitute the paneer with tofu, and substitute the butter with coconut oil.Alternately, use mixed vegetables, such as carrots, green beans, cauliflower, zucchini, and green peas.