Soak dried red chilies in warm water for 15 minutes until softened.
Roast coriander, cumin, and fennel seeds in a dry pan until fragrant, about 2-3 minutes.
Blend all spice paste ingredients together until smooth, adding a little water if needed.
Heat oil in a large pot over medium heat. Add cloves, cinnamon stick, and curry leaves. Fry until fragrant, about 1 minute.
Add the spice paste and sauté for 8-10 minutes until aromatic and oil begins to separate.
Add chicken pieces and fry for 5-7 minutes until well coated with spice paste.
Add cubed potatoes and mix well with the chicken and spices.
Cover and simmer for 20-25 minutes until chicken is cooked through and potatoes are tender.
Stir in thick coconut milk and simmer for another 5 minutes.
Season with salt and sugar to taste. Serve hot with rice.