Sleepless nights? You should read your own links before commenting. The objection is because it cuts through Kashmir which India routinely objects to
(it's why you get no international funding for any proposed dams in Kashmir) and Pakistan does vice versa.
More importantly it is to neutralise Chinese objections to Indian projects in the South China sea. You go through territory India considers disputed, shouldn't expect china's concerns to be heard in the SC sea.
From your link:
Answering queries at a press conference, she said the government had summoned the Chinese envoy over the $46 billion economic corridor that is to run through Pakistani Kashmir.
She said the Indian envoy in Beijing had also raised the issue. Chinese President Xi Jinping had announced the ambitious 3,000 km-long China-Pakistan Economic Corridor (CPEC) during his visit to Pakistan in April.
"Prime minster during his visit took up the issue very firmly and spoke very strongly that the CPEC going through Azad Kashmir (Azad Kashmir) is unacceptable," she said.