A gunfight started on Friday between a group of militants and security forces in Jammu and Kashmir's Kupwara district.
Defence Ministry sources said the troops spotted three to five militants near the Line of Control (LoC) in Kawnar area.
"The militants were challenged after which they fired at the troops, triggering an encounter which is going on," an official said. "The militants have been surrounded."
The group had intruded into India from Pakistan when they were challenged, the sources said.
This was the first instance of fighting between the militants and security forces since the Indian government announced a ceasefire two days back to mark the holy month of Ramadan.
--IANS
sq/mr
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