The 9-km long 'Chenani-Nashri Tunnel' will reduce the distance by 31 kms, bypassing snow-bound upper reaches.
The estimated value of daily fuel savings will be to the tune of Rs 27 lakh, the PMO said in a statement today.
"Besides avoiding large scale deforestation and tree-cutting, the tunnel will provide a safe, all-weather route to commuters travelling from Jammu and Udhampur to Ramban, Banihal and Srinagar," it said.
"The tunnel is equipped with world-class security systems, and is expected to boost tourism and economic activities in the state of Jammu and Kashmir," the statement said.
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There is also a parallel escape tunnel, with 'Cross Passages' connecting to the main tunnel at intervals of 300 metres.
It also has smart features such as an Integrated Traffic Control System; Surveillance, Ventilation and Broadcast Systems; Fire Fighting System; and SOS call-boxes at every 150 metres.
The project has been completed at a cost of over Rs 2,500 crore, the PMO said.