New Delhi, May 4 -- On gleaming buffet lines and crowded dining tables, the white cubes of paneer soaking in rich tomato and spinach gravies often hide a secret: Many of them have never seen the inside of a dairy. Now, the apex food regulator has decided to shut down these pretend paneers engineered from vegetable oil and milk solids, protecting the nutritional integrity of a staple that serves as a key protein source for hundreds of millions of Indians.

A top regulatory committee has decided that India, the world's largest dairy producer, does not really need so-called analogue paneers that are high in fat and low in nutrition, according to two officials and a document seen by Mint. The regulator now plans to ban analogue paneers outrig...