As I see it, Kashmir is more a matter of ideology than of territory to India.
2. During the struggle for India’s independence, the Muslim League pressed for the partition of India on the basis of a two nation theory proclaimed by it. It claimed that Hindus and Muslims- the two major religions accounting for most of the population of India – are two separate nations and and the country should be divided into two parts where each of the two ‘nations’ could live independently. The Indian National Congress enjoying the following practically of all Indians, including Muslims not subscribing to the Muslim League’s thesis,opposed the two Nation theory and wanted a United India. Ultimately, however, a separate home land for Muslims was agreed to by the Congress yielding to the intransigence of the Muslim League which was resulting in delaying the country’s independence apart from causing a lot of bloodshed in the country due to Hindu-Muslim clashes caused by the agitations carried on by the Muslim League for the creation of Pakistan. The British left India in 1947 leaving the country divided into India and Pakistan with Muslim majority states (or Provinces) constituting Pakistan. Yet more Muslims were left in India than in Pakistan (belying, in a way, the two Nation theory).India proclaimed itself a secular State with equal rights for all its citizens irrespective of caste, creed or religion.
3. Kashmir was then a princely state which, as per the terms framed by the British, had the freedom either to accede to India or Pakistan or to proclaim independence. The State had a Muslim majority but a Hindu ruler. The major political party of the State, viz. the National Conference,having following of the Muslims of the State, was sympathetic to the Indian National Congress and did not quite subscribe to the two Nation theory. When the Maharaja (or King) of the State took time in choosing out of the options available to him, Pakistan dispatched irregular forces to occupy the State (on its behalf). The Maharaja then decided to accede to India and called for India’s help to resist the invasion of the State. India intervened, keeping in view the inclinations of the State’s population as projected by the National Conference. India’s intervention helped save the State (except for part of it which the Pakistani irregulars did not vacate). The accession of the State to India was accepted by the National Conference who then also took reins of the State’s government as part of a democratic process.
4. Kashmir’s accession to India with the support of its Muslim majority population had a great significance for India in as much as it vindicated India’s stand against the two Nation theory and of proclaiming itself as a secular state. This still continues to be relevant and India just cannot accept the contention that because some separatists in Kashmir are raising a voice against India, Pakistan gets a right to allow terrorists to use its territories to aid and abet the separatists to create violent disturbances in Kashmir. India can be expected to use all its might to frustrate any such deigns of Pakistan. It is more than a question of territory. It is a question of India’s resolve to maintain its secular character which has implications for the whole of its population.
5. Incidentally, while the state of Kashmir as a whole has a majority of Muslims, a major constituent, Jammu, has Hindu majority. Another part, Ladakh, has significant Buddhist population.