If Kashmir were to become a sovereign nation
1)Another partition and mass migration and with it lot of repercussion
2)Another Islamic state bordering India
3)Communal Violence in India
4)India and Pakistan would continue to fight to exert influence over Kashmir. I would say the enmity would be more intense than it is now
5)India would have another Afghanistan next to its border, with the same repercussions that Pakistan is experiencing now at its western border.
6)Kashmir would become new battleground for world leading powers so as to exert their influence in the region and contain India and China
7)Kashmir would become another playground for Taliban or its clones
8)There will be huge unrest in states of India bordering Kashmir
9)Pakistan would loose its share of water as the Indus Treaty would become redundant and major parts of Pakistan would become barren. This may lead to lot of refugee influx into India and Iran, leading to total disaster for the whole region
The list can go on