In a small bowl mix the corn starch with 1/4 cup of milk and set aside.
In a heavy bottom pan boil 2 cups of milk over medium high heat. Wet inside of the pan with water and put about 2 tablespoons of water before pouring the milk in a pan this prevents the burning of the milk in bottom of the pan. Stir the milk occasionally.
After milk comes to boil reduce the heat to medium and let it boil for about 10-12 minutes.
Add the corn starch and mix it well, there should no lumps, after milk comes to boil let it boil for additional 2-3 minutes
Add the sugar and shredded paneer stir and let it boil for 4-5 minutes, stir occasionally.
Paneer Kheer should have consistency of a thick batter. This should be chilled before serving.