‘Kashmira’ is a children's comedy adventure film. Kashmira (Rabia Nazki) is a young orphan girl who loses her parents at an early age. She has been given shelter by her uncle Ramzan, who leaves the army after injuring his leg badly in the war. He now sells art photographs/paintings of picturesque Kashmir at throwaway prices to the city art dealer. Kashmira and her cousin Tazi (Veena Kapoor) ask him why he is selling the treasure of lovely Kashmir at such a low price. He tells Tazi that he is promoting the rich culture and heritage of Kashmir in the entire world. Kashmira earns her livelihood by using her pony Kesari to ferry luggage on the hilly terrain. In order to earn more, she instigates fellow pony-owners Kareem Chacha, Abdul, and Arshad Bhai to raise the hiring rates of ponies for use by travelers. When the travelers arrive by bus, all the pony owners quote Rs.10 instead of the usual rate of Rs.2 but Kashmira smartly takes the tourists by agreeing to charge only the usual rate. All her fellow pony owners feel cheated and boycott her.
Kashmira loves nature and remembers her parents by the trees they have planted in their life-time. Her grandfather Fakhrudin Namaz Ahmad consoles her in her sadness while her grandmother Sharifa Begum feeds and sings lullabies to her. She is being brought up under the shadow of her father Abba Jaan. Her mother while going had said she has not died but has gone to the other side of the mountain, and the leaves of her tree will emanate the fragrance of milk. One branch of Ramzan Chacha’s tree has broken indicating his war injury. Kashmira has planted one tree for her beloved pony brother ‘Kashmir Kesari’, who was born in a saffron field. When young Mohan (Ravi Tikoo) and his father Lalaji come to live in the neighbourhood Mohan is impressed by Kashmira’s fortitude. He begins to dislike his father’s job which involves contract jobs to cut trees. Inspired by Kashmira, Mohan also plants a tree in his mother’s name.
Meanwhile, an epidemic breaks out in the interiors of Kashmir. A team of doctors arrives to help the victim. Due to heavy snowfall, all the routes are covered by a thick layer of snow. Kashmira comes forward to carry the medicine boxes on her Kesari and guides the doctor’s team to the affected villages. She even performs nursing duties, but in the process, she herself catches the disease. She has to be rushed back to Srinagar for emergency treatment. Mohan comes to know about her illness, and he also rushes to Srinagar. When she recovers, the doctor praises her selfless services to the community and she is honoured by the government.
Kashmira takes up her crusade to save trees by providing stiff opposition to the felling of trees by land mafia. She offers to pay back the cost of the land by selling her ancestral jewelry given by her parents for her wedding. But Kashmira’s cousin Ishtaque (Mukesh Sharma) has a nefarious plan of his own. He steals the jewelry but Kesari gets after him until Ishtaque slips into a waterfall and dies. The jewelry is recovered by Kashmira, and all heave a sigh of relief. Kashmira is again active on her mission.