The two-hour gunbattle took place in the wrst-affected Pidmel-Polampalli area of the district when a squad of state police Special Task Force (STF) was out for operations.
Officials said a group of about 300 Maoists opened heavy fire on the police team at around 9:15 am when it was conducting a search operation in the jungles of the district, about 390kms south of state capital Raipur.
"Seven of our troops have been martyred while about twelve injured in the encounter," Additional Director General of Police (Anti-Naxal operations) R K Vij said.
Officials said a "good number" of weapons of the martyrs and the injured troops were looted by the Naxals before fleeing.
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Officials said the encounter has hearlded the first major Tactical Counter Offensive Campaign (TCOC) operation which is conducted by Naxals to gain ground every summer.
Home Minister Rajnath Singh spoke to Chief Minister Raman Singh over phone who apprised him about the situation in Sukma.
"Extra CRPF teams have been rushed to the spot. I salute the bravery of our security personnel who laid down their lives while fighting the Naxals. I wish for speedy recovery of the injured," Rajnath said.