Security forces launched a cordon and search operation in the Redwani area of Kulgam, in south Kashmir, during the night after receiving specific inputs about the presence of militants there, a police official said.
He said the search operation turned into an encounter after militants fired at security forces.
The security forces retaliated and the exchange of firing was going on, the official said, adding further details are awaited.
This is the second gunfight in Kulgam district and the third in south Kashmir in the last two days.
Four militants were killed in two encounters with security forces in south Kashmir on Thursday.