Heat the olive oil in a large casserole dish over a moderate heat and sweat the onion for 4-5 minutes until soft. Add the garlic and continue to cook, stirring occasionally for 3-4 minutes. Add the red chilli, the ground spices, the chilli powder, garam masala, sugar and 1 tsp of salt at this point, stir well, and cook for 1-2 minutes. Add the coconut milk and 100ml of water to the dish and bring to a simmer.