I have couple of Indian friends in Netherlands who would like to have some cottage cheese or paneer (raw) from India. Can I carry around 500gms of it with me in my hand luggage or checkin bag?
The EU is quite strict about bringing foodstuffs in from outside the EU. The Dutch agency that administers this issue in the Netherlands has a webpage here. That page contains this text:
Animal products and foodstuffs
Do not import any animal products into the Netherlands from outside the EU. And also do not order them, for example, through the internet. In the EU strict requirements apply to the import of animal products and food. Examples: cheese, milk and milk products, eggs, meat, fresh or processed fishing products, skins, game trophies. Do you nevertheless still want to import animal products and food into the EU? Then you almost always need a health certificate.
The page goes on to discuss obtaining a health certificate from the food's country or origin, and says that even with a certificate the food will be "inspected by veterinary experts."
So unless you're willing to endure a lot of bureaucratic red tape, it appears that you'll not be permitted to bring cottage cheese or paneer from India, either in your hand luggage or in your hold luggage.