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Heat oil in a large vessel over medium high heat. Add ginger garlic paste and cook, stirring often, until fragrant, about 30 seconds. Add onions and cook until translucent, about 2 to 3 minutes.
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In a small bowl, combine red chili powder and turmeric. Add a couple of tablespoons of water to create a slurry. Set aside.
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Add mustard seeds and curry leaves, being careful as they may splutter in the hot oil. Cook for a minute, then add the turmeric slurry and cook for about 30 seconds.
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Add chicken, making sure to coat with the spices completely.
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Add tomato sauce and salt, and cook until the sauce starts to thicken and the oil begins to separate from the gravy. This will take a few minutes.
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Add coconut milk, cover, and reduce heat to medium. Simmer for 8 to 10 minutes, until thickened. If sauce is too thin, increase heat and allow it to cook down.
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Remove from heat, and garnish with green chili and cilantro.