Pakistan is damn near a failed state. The partition from India doesn't look like a good idea now many years later.
If it hadn't have happened then a united India would be the most dangerous country in the world today by far. As it stands India is already in the top 3 or 5 (I forget exactly) most dangerous countries in the world for terrorist attacks. If the Muslims didn't have their own few independent provinces in the east and west of this united India, the terrorist threat pushing for separation would be so much worse than it already is.
The ultimate goal of Islamist terrorists in Pakistan and India is the realisation a so-called prophecy they call 'Ghazwa-e-Hind,' the complete Islamic conquest of India followed by the complete extermination of all non-Muslims who reside there. They will not stop with creating a separate Kashmiri state. That doesn't matter to them. What they want is a genocide of the whole subcontinent. It's a prophecy. They feel that it must be done in order to usher in the End Times and all that shyt. Geopolitics is completely irrelevant to the theological framework under which they operate. This is why they attack the Pakistani government and civilians with the same force that they attack the Indians.
They are just like the organisations in the Palestinian dispute. Fatah, Hamas and Hezbollah don't care about Israel, they care about a genocide of every non-Muslim in what they call "the land of the Al-Aqsa mosque." They will not stop merely at destroying the Israeli state. It doesn't matter to them.
So there's no question of concession or appeasement. Surrendering Pakistan did nothing, and surrendering Kashmir will do nothing. Frankly it is for the best that there is a border between Pakistan and India, it helps keep some of the terrorist problem on their side of the border.