The Z-Morh or Sonmarg tunnel, stretching 6.4 kilometres (four miles) beneath a treacherous mountain pass cut off by snow for between four to six months a year, is part of a wider infrastructure drive in border zones.
It helps connect Indian-administered Kashmir with Ladakh, acting as a stepping stone in opening the Srinagar-Leh Highway all year round to allow rapid deployment of military supplies.
"With the opening of the tunnel here, connectivity will significantly improve," Modi said, wrapped in a jacket from the freezing cold after cutting the ribbon on the $313 million project that has taken a decade to construct.
India and China, the world's two most populous nations, are intense rivals competing for strategic influence across South Asia, and their 3,500-kilometre (2,200-mile) shared frontier has been a perennial source of tension.
Their troops clashed in 2020, killing at least 20 Indian and four Chinese soldiers, and forces from both sides today face off across contested high-altitude borderlands.
Beijing and New Delhi agreed in October on patrols in disputed areas, shortly before a rare formal meeting -- the first in five years -- between Chinese President Xi Jinping and Modi.
Another tunnel on the same route, the 13-kilometre (eight-mile) long Zojila tunnel, is more than halfway completed and slated to open in 2026, according to the information ministry.
The Z-Morh tunnel was the site of an attack in October in which gunmen killed seven workers, part of the decades-long insurgency in disputed Kashmir.
Muslim-majority Kashmir has been divided between India and Pakistan since their independence from British rule in 1947, and both claim the Himalayan territory in full.
Rebel groups demand independence for Kashmir or its merger with Pakistan.
India has also built a $3.9 billion railway line connecting the lowland plains with Kashmir for the first time, including the construction of the Chenab Rail Bridge, the highest of its kind in the world.
The 272-kilometre railway begins in the garrison city of Udhampur, headquarters of the army's northern command, and runs through the region's capital Srinagar.
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