The incident took place at Songmagre village where a group of six to seven militants were hiding.
A team comprising Special Operation Team and Special Weapons and Tactics (SWAT) commandoes raided the village.
On seeing the police team, the militants started firing and a heavy exchange of fire ensued. Sub-inspector Promoth Sangma (50) was killed in the shootout, police said.
The militants taking cover of the thick jungles and hostile terrain managed to flee.
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The area, about 55 km from district headquarters Tura, is frequented by militants of Achik Matgrik Elite Force and A'chik Songna An'pachakgipa Kotok.
Promoth Sangma had bagged the prestigious Governor Police Medal earlier this year.
Police said the department has also recently recommended his name for the President's Police Medal for his outstanding services.