The director, famously known as showman for his blockbusters like 'Karz', 'Kalicharan' and 'Taal', said that the situation in the militancy-hit state had improved considerably.
Kashmir was Bollywood's favourite destination and films like 'Aarzoo', 'Aan Milo Sajna', 'Kashmir Ki Kali' and 'Silsila' were shot in the valley but with the rise of militancy in the state, filmmakers opted out for places like Switzerland or Manali.
However, Ghai, who shot his multistarrer 'Karma' in the valley said Kashmir remains Bollywood's favourite destination but "it will take people's will to change things".
"We know there is no parallel to Kashmir beauty. My wife and me recently visited Zurich, but despite its breathtaking beauty, she was quick to point out that there can be no second Kashmir," he said.
Ghai also lamented that Punjab Government has done nothing to promote the art and culture despite the fact that Bollywood was dominated by the Punjabis.
"It is sad that successive governments in Punjab have done nothing to promote art and culture. Over the past 50 years, 80 per cent of Bollywood has been dominated by the Punjabis.
Ghai said the film industry in the south was flourishing because of the will of the government there to promote their art and culture.
"Rajnikant can get a whopping Rs 30 crore for his film in the south, a fraction of which even a top actor cannot think of getting in a Punjabi film," said Ghai, who is here to scout for new talent for his acting school
The filmmaker, who runs Whistling Woods Actor Studio, said there was need to develop institutes which would teach the upcoming talent in Punjab.
"The times since Dileep Kumar, Guru Dutt and even Amitabh Bachchan have changed. It took a few flops for Amitabh and even a few more for Jackie Shroff to improve, but in present times there is so much competition. There is virtually no scope for on-the-job learning," he said.
"Even in US, we have specialised training institutes for acting and allied courses for direction, cinematography, technicians and animation," he added.
Ghai, whose last directorial venture was 'Yuvvraj', is satisfied with the quality of films being made in Bollywood days.
"There are many promising directors doing a good job," he said.
The director-producer, said he does not believe in remakes and has always istrived to make films which can easily relate to.