Paneer Chili Dry Recipe: A 30-minute Indo-Chinese

This classic Indian street food can easily be vegan, gluten-free and your addition for the next house party or potluck

For many South Asian millennials, paneer chili was the ultimate restaurant treat; a dish you eagerly waited to order or a weekend indulgence from the local takeaway. Spicy, tangy, sweet, and packed with umami, it was often our first introduction to bold, addictive flavors.

Growing up, we were told to enjoy it in moderation; takeaway Indo-Chinese food, with its oil, flavor enhancers, and deep-fried richness, was rarely seen as an everyday meal. But what if you could recreate the same delicious experience at home, with a healthier twist? That’s exactly what this recipe brings you, a wholesome, nostalgic dish that’s just as satisfying, but made with fresh ingredients you can feel good about.

Imagine serving this as a weeknight staple rather than a rare indulgence. A home-cooked version that’s packed with protein, crunch, and spice, yet balanced enough for a family dinner.

Even if you’ve never tried Indo-Chinese cuisine before, this dish is a perfect entry point—crunchy, umami-rich, and loaded with bold flavors.

What is Paneer?

Paneer is a fresh, acid-set, non-melting Indian cottage cheese, commonly used in North Indian and Pakistani cuisine. It has a mild, nutty, milky taste and a firm yet creamy texture. A long-standing debate exists between paneer and its East Asian counterpart, tofu. While tofu absorbs marinades better and adapts to different textures, paneer has a naturally richer flavor. Ultimately, which one works better in a dish is a matter of preference. Personally, I love paneer because of its familiar taste and texture, but I’ve also come to appreciate tofu for its versatility.

I love buying my paneer from Tesco as it is very accessible. It is available even at Tesco Express stores and that makes it extremely easy to grab it quickly. The quality is high and works well for Indian curries too!

If you’d like to try making your own paneer at home, it’s surprisingly easy! Homemade paneer has a better texture, holds its shape well, and melts in your mouth. Click here to learn how to make it from scratch.

Vegan & Gluten-Free Adaptations for Paneer Chili

This recipe can easily be made vegan by swapping paneer for medium-firm/firm tofu. The flavors remain just as bold, and you get the added benefits of plant-based protein. For a gluten-free version, simply replace soy sauce with tamari or coconut aminos.

Whether you’re making this for a cozy weeknight dinner, a weekend gathering, or your next house party, paneer chili is bound to be a hit. Try it once, and it might just become a staple in your home!

What you need

(serves 4)

Preparing the paneer

• 600 g paneer, cubed (I prefer the paneer cheese from Tesco)
• ½ cup cornstarch (substitute this with rice flour or arrowroot to make it gluten-free)
• 1 tsp ginger galic paste
• 1 tsp kashmiri red chili powder (optional, or can substitute with ½ tsp paprika)
• ½ tsp salt
• ½ cup water
• 3 tsp Sesame oil (can subtitute with olive oil, or any other neutral oil)

For the sauce

• 1 green bell pepper, chopped into large petal / triangles
• 1 red onion, chopped into large petal / triangles
• 4 cloves of garlic, finely chopped
• 1 slit green chili (optional, you may also remove the seeds if you want to control the spice levels in your dish)
• 3 tbsp rice vinegar (can substitute with 2 tbsp white vinegar)
• 3 tbsp dark soy sauce
• 1 tbsp chili sauce (optional, I love spicy food so I use 2 tsp of green Habanero sauce but you can use a mild green chili sauce)
• ½ tsp sugar
• 2 tbsp tomato ketchup
• ½ inch ginger, finely chopped or grated
• 2 tbsp sesame oil
• 1 tsp cornstarch (substitute with rice or arrowroot flour for a gluten-free version)
• 2 tbsp water
• Salt, to taste

For the garnish

• 2 tsp sesame seeds, roasted
• 3 tbsp spring onion greens, chopped at a 45° angle for the best flavour

Let’s dive in to the recipe now!

Paneer Chili Dry Recipe

Preparing the vegetables for the sauce

• Heat sesame oil in a pan. Once the oil heats, saute the minced garlic, slit green chili and grated (or chopped) ginger. Let it become golden and fragrant.
• Add the onion and bell pepper. Toss on high heat for about a minute until lightly cooked but still crunchy. Set aside. It is very important to ensure that the vegetables have a bite to them to ensure that the textures in the paneer chilli are interesting.

Pan-fry the paneer

• In a bowl add cornstarch (or gluten free substitute like arrowroot flour), kashmiri red chill (or paprika), ginger garlic paste and water. Mix well with a spoon till the mixture is a lump-free batter.
• Coat the paneer cubes in this mixture.
• Brush a pan with oil and let it heat. Once heated, place the coated paneer pieces such that all pieces touch the pan. Pan-fry each side till golden brown. Keep it aside.

Preparing the paneer chilli sauce

• Heat the pan with the vegetables on a low flame and add the soy sauce, chili sauce, rice vinegar (or white vinegar) and tomato ketchup and salt, to taste. Combine well.
• In a small bowl, mix cornstarch with water to make a slurry. Pour it over the vegetables and stir continuously until the sauce turns glossy and thick.
• Add the pan-fried paneer to the pan. Toss everything together over high heat for 30 seconds until well-coated.

Garnish & serve the paneer chilli

• Top the paneer chili with roasted sesame seeds and chopped spring onion greens. Spring onion greens add a wonderful crunch, a pungent bite and contrast the chewy paneer perfectly.
• Serve this paneer chili with steaming Hakka noodles for a main course or in lettuce cups for an appetiser. If you want to serve it in lettuce cups as an appetiser, I suggest that you cut the paneer into 1/4 inch cubes. The small cubes pack a greater punch and the texture complements lettuce better.

Serving Suggestions

1. Pair the paneer chilli with some steaming hot Hakka Noodles.
2. For a Indo-chinese feast, also make these crispy air-fried gobi manchurian bites!
3. Pair with a lemonade or dark rum for a celebratory, nostalgic 1990s Indian family meal.

If you loves this Paneer Chilli recipe, add your experience in the comments below! Tell me what your favourite pairings were and whether this is now a unique party meal in your family.