Start by peeling and dicing the potatoes, slicing the shallots, and pounding the lemongrass to release its flavor. Set everything aside for easy access during cooking.
In a large pot or Dutch oven, heat the oil over medium heat. Add the sliced shallots and sauté until they turn translucent and fragrant, about 3-4 minutes.
Next, add the pounded lemongrass and the instant curry paste to the pot. Stir well, allowing the spices to bloom and infuse the oil, for about 2 minutes.
Add the chicken pieces to the pot, stirring to coat them with the curry paste mixture. Cook for about 5-7 minutes until the chicken starts to brown.
Pour in the 2 cups of water and bring the mixture to a gentle boil. Add the diced potatoes and stir to combine. Reduce the heat to low and cover the pot, letting it simmer for about 30-35 minutes.
Once the chicken is cooked through and the potatoes are tender, stir in the coconut milk. Let it cook for an additional 5 minutes, allowing the flavors to meld together.
If using, add the sprig of curry leaves for an aromatic touch. Serve your chicken curry with potatoes hot, alongside steamed rice or naan for a complete meal.