The arrested accused have been identified as L Malsar Bayyaram, Nagendra, A Venkata Narayana, Md Afsar, B Naveen, Md Saleem, M Pavan Kumar and V Venkanna Bayyaram, Superintendent of Police Warangal (Rural) G Pal Raj told reporters.
The accused had teamed with the intention to extort money, Pal Raj said adding that they had purchased two China-made 7.6 mm rifles, three dummy pistols and other material from Bihar.
The accused had threatened some contractors and traders in Khammam, Warangal districts and extorted Rs 15 lakh, police added.
Further investigation is on.