Kashmiri chili powder is a name for a powdered chili pepper that is relatively mild in heat and full-flavoured, but it’s main characteristic is a vibrant red colouring. It is somewhat similar to paprika in this respect – it is used more for colouring than for heat, although it’s slightly hotter than paprika.
As mentioned though, the main quality of Kashmiri chili powder is it’s ability to impart a vibrant red colour to dishes. Before red food dye, it was the colouring agent in tandoori chicken and it also provides the rich red in Rogan Josh dishes. It will redden pretty much anything capable of absorbing colour: oils and fats, the surface of meats, onion, etc.