Transfer dried red chilies (stalks removed) to a large mixing bowl. Pour boiling hot water over the chilies and let them soak for 25-30 minutes. Keep a heavy ladle over the chilies to prevent them from floating on top of the water.
Drain the water and add the soaked chilies to a blender or a food processor along with ¼ cup water.
Blend to make a smooth thick paste. Scrape the sides of the blender a few times while blending.
Heat vegetable oil in a pan over medium heat. Once the oil is hot, add the chilli paste to the pan and saute for about 3-4 minutes.
Remove the pan from heat and let the paste cool completely. Transfer it to a clean jar, secure with a tight lid and refrigerate for up to 15 days. Use as desired!