Narendra Modi hailed his move to strip Kashmir of its autonomy, in a speech marking India's Independence Day.
Speaking from the ramparts of the Red Fort in Delhi, the Indian Prime Minister said on Thursday that the decision was one of several "path-breaking" moves by his newly re-elected administration.
He said "fresh thinking" was needed after seven decades of failure to ensure harmony in the region.
"We do not believe in creating problems or prolonging them. In less than 70 days of the new government, Article 370 has become history. And in both houses of parliament, two-thirds of the members supported this step," said Mr Modi, 68.
"Jammu-Kashmir and Ladakh will become a big inspiration for India's growth journey, comfort, progress and peace."
Ladakh is the newly carved-out union territory.
"The old arrangement in Jammu, Kashmir and Ladakh encouraged corruption and nepotism, as well as injustice when it came to rights of women, children, Dalits, tribal communities," he said.
"Their dreams get new wings," he said.
India revoked the special status of its administered part of Kashmir, known as Jammu and Kashmir, on August 5 and moved to quell widespread unrest by shutting down communications and clamping down on freedom of movement.
Islamabad retaliated by suspending bilateral trade and all public transport links with India, as well as expelling New Delhi's ambassador to Islamabad.
Signaling the extent of international alarm over Kashmir, the UN Security Council will hold a closed doors session on the crisis on Friday. The National understands that China requested the meeting on Pakistan's behalf.
India administers the populous Kashmir Valley and the region around Jammu city, while Pakistan controls a wedge of territory in the west known as Azad Kashmir.
India's revocation of special status for Jammu and Kashmir blocks the state's right to frame its own laws and allows non-residents to buy property there.
Imran Khan, the Pakistan Prime Minister, used his Independence Day address to warn India on Wednesday that Pakistan was prepared to respond to any aggression in the disputed region.
Mr Khan said on Wednesday that time had come to teach Delhi a lesson and promised to "fight until the end".
"The Pakistani army has solid information that they are planning to do something in Pakistani Kashmir, and they are ready and will give a solid response."
Mr Modi's 90-minute speech ended with the prime minister leading chants of "Jai Hind" ("Long live India") with schoolchildren dressed in the saffron, white and green of the Indian flag, before a rendition of the national anthem.
