Add oil to the Pot. Once it is heated, add cumin seeds. Once it crackles, add chopped onion, a pinch of salt and saute for 2-3 minutes.
Add ginger garlic paste and mix well. Saute for a minute.
Now add chopped tomatoes and combine well. Add turmeric powder, Kashmiri chili powder, coriander powder, cumin powder, sugar and salt. Mix and let it cook for 2 minutes.
Add water. Close the pot and keep the pressure valve in Sealing position. Pressure cook for 5 minutes. Once done, release pressure immediately.
Open the pot and blend the ingredients to a smooth and fine paste using an immersion blender. If you don't have an immersion blender, wait for the mixture to cool, transfer it to a blender and make a fine paste.
Now add paneer cubes, frozen green peas, crushed kasuri methi, garam masala powder. Gently mix. Adjust salt if needed.
Close the Pot and keep the pressure valve in sealing position. Pressure cook again for 1 minute. Release pressure immediately. Garnish with cilantro if desired. Instant Pot Matar Paneer is ready. Serve hot with rice or roti.