Place 2 cups water in the inner pot and place the rinsed potatoes in the water. Secure the lid on the instant pot and select manual/high pressure for 2 minutes.
Once done, quick release the pressure and open the lid. Discard the water. Once cool, peel the skin off. The skin will easily peel off with your fingers. Then give them a poke with a toothpick. Make about 6 to 10 holes in each potato. This enables the spices to penetrate the potatoes when you cook them.
Deep fry the potatoes on medium flame until they turn dark brown. The deep frying process makes the potatoes sizzle and brown nicely. Slow remove the potatoes from the oil and place on a napkin to drain the excess oil.
When ready to cook, select sauté on the instant pot and adjust to normal. Add oil to the pot. Once the oil is hot add cumin seeds, asafoetida, cloves, black cardamom pod, green cardamom pod, cinnamon stick and bay leaf.
After the cumin seeds splutter, add Kashmiri chili powder and 1/2 cup water. Stir well.
Then add ground cumin, ground fennel, ground ginger, beaten yogurt and stir well. Keep stirring for 30 seconds until the yogurt mixes well. This step is key to prevent the yogurt from splitting. It needs to be whipped at room temperature and mixed well continually when added to the pot. Then add salt and stir well. Let it sauté for about a minute till the oil leaves the side. Then add the baby potatoes and 1 and ¼ cup water.
Press cancel. Secure the lid on and select manual/high pressure for 4 minutes. When done let the pressure release naturally. If you want it less soupy select saute for a minute or two to reach the desired consistency. Transfer to a serving bowl. Discard the bay leaf. Serve over steamed rice.