Actually the world is full of spots where area is held down forcibly...China holds down Tibet,Russia holds down the entire Caucasus, Spain holds down Basque,Turkey holds down the Kurdish lands etc etc. If you look at the map Kashmir valley is relatively a very small area with a tiny percentage of India's population.
Not to widen the discussion here to so many theaters, but lets take a couple of examples:
Russia has had a whale of a time holding down anything, and things are fragmenting, if you haven't noticed. They've already lost control of swathes of territory. The 'stans, Chechnya, Dagestan, issues with Georgia... where have you been???
I think you have a very short sighted view of history... the USSR tried to hold down people against their will and they did succeed for 70 or 80 years, but then look what happened. And the USSR was far stronger than India militarily.
The Europeans tried to hold down territories across the world, and not only have they lost all of them, the people they tried to suppress are now taking over their would-be colonial occupier! Who would have thought that France would be 10+% muslim in 2010 and would be a society in complete flux, with muslim minorities now the fastest growing demographic. The percentages in some other European countries are even higher.
You mention Spain, yet you forget that even after holding Spain itself for hundreds of years, the Ottomans ultimately had to contend with Spain reverting to what it always was... a christian state.
The Kashmir conflict has been going on for 63 years, which in a way is a long time. But viewed in a different way - from the lens of history - this is a very short period. As long as an armed rebellion continues in Kashmir anything can happen, at any time. The length of the conflict has demonstrated that the rebellion against India has been transmitted through generations... and that is serious. Serious enough for the GoI to want to seek a compromise with Pakistan.
India keeps returning to the negotiating table over and over. Why do you think this is? Countries do things in their interest, and if it wasn'tin India's interest to resolve Kashmir, they wouldn't be participating in the backdoor diplomacy which is going on as we speak.
I really do not see what India pays internationally for holding down the Kashmir valley. No one cares to put it bluntly.
If your government agreed with you, they would not have worked out a compromise with Pakistan that changes the status quo. Please go back and read my posts. I explained my point of view on this cavalier "it's all ok - there's no problem in Kashmir" attitude earlier. You can continue to hold it, of course, but I continue to think nothing of it.