War-weary locals are set to enjoy some of the first major New Year's events since an anti-India insurgency broke out in the snow-capped Himalayan region 20 years ago.
Hotels plan to lay on dinners and dances and there will be parties in the region's ski resort of Gulmarg in a further sign of life returning to normal as violence wanes.
Indian Kashmir's leading woman separatist and anti-vice campaigner took aim at party organisers and urged residents to shun events that could expose them to "obscenity and immorality."
"People should refrain from attending such functions," Aasiya Andrabi said in a statement.
Andrabi, who heads Dukhtaran-e-Milat or Daughters of Faith, has been jailed in the past for her anti-vice campaign, which includes preventing couples from dating or celebrating Valentine's Day.
"We are fighting for freedom and it demands character building rather than enjoying the anti-Islamic celebrations," she said.
Mushtaq Chaya, a local hotel owner who is organising a dinner and dance, says Kashmiris should be free to enjoy themselves.
"Why should Kashmiris see New Year celebrations of other states and countries on TV only? We want them to be part of the celebrations," he said.
Hardline Muslim militants frequently targeted cinema halls, video parlours and liquor shops across the region during the height of the insurgency.
Andrabi, who served a two-year jail term in the mid-1990s for helping Muslim rebels, has in the past smeared black paint on racy Bollywood film posters and demanded women veil themselves fully.
More than 47,000 people have been killed in Indian Kashmir since 1989 when Islamic militants rose in revolt against New Delhi's rule. India accuses Pakistan of arming and training the rebels, a charge Islamabad denies.
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