An encounter started at Yamrach area of Kulgam in south Kashmir on Wednesday night between militants and security forces, police said.
According to details, police had a specific input about the presence of militants in the area.
A cordon was laid and as the forced zeroed in on the spot, the hiding militants fired at the security forces triggering the encounter, informed sources said.
More reinforcements have been brought in and all the exit points of the area have been sealed off to prevent the militants from escaping.
It is a joint operation by the police and the army.