With the eruption of violence, the film-makers fled. And Kashmir's cinemas closed as well, bombed into darkness by Islamic militants. They have been closed ever since. Then last year two small new ones opened. But both were in military cantonment areas, well protected against attack.
So the reopening last Friday after 10 years of the Regal Cinema in central Srinagar was a bold attempt to turn back the clock to happier times. But it was not to be: after the second screening - the film a typical slice of Hindi escapism entitled Love Is Not Just a Game - militants threw grenades at the audience streaming out, killing two and injuring 20.
The Regal is dark again now. On Sunday Tehreek-ul-Mujahideen, an Islamic fundamentalist militant group, said it was responsible and demand-ed that all cinemas, video cassette shops and cable TV operators close in two days.
Underlining their demand, militants also ransacked the premises of a cable TV operator outside Srinagar, destroying his equipment. Tehreek- ul- Mujahideen says it has called for the ban to enforce strictly the Islamic code of conduct throughout the Kashmir Valley.
In the proscription of something as innocent as film-going there is a strong whiff of Afghanistan's Taliban, for whom any medium that employs human imagery is taboo.
But observers in Srinagar believe this is less a reflex of Islamic dogma than the latest round in a trial of strength and propaganda between the militants and the state authorities. The Chief Minister, Farooq Abdullah, and his government are doing everything in their power to tell the world that life in Kashmir is back to normal - or even better than that.
This year saw the return of a few film crews to the valley. A Hindu temple that locked its doors in 1990 opened again to the few Hindus still living here. In spring, domestic tourists began streaming back to Kashmir - 75,000 by the end of May, compared with 615 for the same period in 1990 and 2,000 last year.
It was at this point - some believe it was no coincidence - that Pakistani Army infiltrators in the mountains north-east of the valley provoked the Kargil conflict, which nearly plunged India and Pakistan into another full-scale war.
But the Pakistanis and their militant allies withdrew. And now state government ministers insist Kargil was no more than a nasty hiccup in Kashmir's return to normality.
To ram home the message, Dr Abdullah also this month announced the granting of a licence to India's first casino, due to open in autumn in Srinagar's Grand Palace Hotel, offering competition to the host of casinos operating in and around Kathmandu in Nepal.
He has also authorised the building of a golf course, now taking shape on the shore of Dal Lake. Asked why he was pouring millions of rupees into such a venture when the state was practically bankrupt, he said: "Even if I have to spend billions ... of rupees I will do it for ... my people, who have no other means [except tourism] to earn their bread." Gambling and golf were followed in quick succession by the opening of the Regal Cinema. But now the militants have given their answer.
Kashmir's election - the final polling date in the state is next Monday - has been a terrifying shambles: a mass boycott, the assassination of a candidate of the right-wing Hindu Bharatiya Janata Party, the dragging of refusenik youths to the polls by paramilitaries, the attempted assassination of another candidate, have all left the valley in a state of extreme tension. To open a cinema and hail the return of normality against such a backdrop smacks of Don Quixote.
The confrontation in Kashmir seems to have entered a new phase. More than a military struggle, what is being waged now is a propaganda war. The militants are making a determined effort to paint the state government as illegitimate and Kashmir as ungovernable by India.
With the example of East Timor before them, now they see their best opportunity to present Kashmir as a suitable case for similar treatment - in particular for the holding of the plebiscite conditionally prom-ised by the United Nations on 1 January 1948 but never held. Any fair plebiscite would almost certainly go against India, as surely as East Timor's went against Indonesia.
Dr Abdullah tries strenuously, by contrast, to paint all Kashmir's problems as temporary local difficulties. But although it is true that most of the popular heat went out of Kashmir's insurgency years ago, he is not having much luck.