Fresh chillies should have smooth, firm, glossy skin with no soft spots or shriveling.
As a general rule, green chillies tend to be hotter than red chillies. Small, pointed chillies are usually hotter than larger, more rounded varieties. Whole chillies can be de-seeded to make them a little less hot. Green chillies are called hari mirch, and red chillies are called lal mirch.
In most recipes the fresh chillies are added early in the cooking process, and this tends to lessen the first bite, but certainly doesn’t take away their effect. A garnish of finely sliced chilli, usually of the red variety, can add that bite back. For the less adventurous, try washing and de-seeding the chilli before using them this way.
The flavour of a fresh chilli is quite different to the dried version, and the two cannot be interchanged. Chilli powder is also not a substitute for fresh chilli.
Note that chillies were not native to India, but were introduced by the Portuguese in the middle of the 1600s CE.
Chillies are available from supermarkets. Buy as few as you need, because they don’t keep well, even in a refrigerator, and lose their pungency quite quickly. You can tell the freshness of chillies by their stalks. Fresh chillies have green stalks, not brown or black.