The man, identified as Santosh Gouda, sustained gunshot injuries on both his legs in the exchange of fire at New Baiganabadi under Berhampur Sadara Police Station limit, a police official said.
Some ammunition and a motorbike were seized from his possession, he said, adding, one of his accomplices managed to escape.
Three police personnel, including inspector-in-charge, Berhampur Sadara, Siba Shankar Mohapatra, sustained injuries in the encounter, the official said.
Goud was admitted at the MKCG Medical College and Hospital, where his condition was stated to be stable, hospital sources said.