Muslim-majority Kashmir has been divided between rivals India and Pakistan since their independence from British rule in 1947, and both claim the Himalayan territory in full.

The Indian-administered portion of the region is in the middle of its first local assembly elections in a decade -- a vote that began earlier this month and concludes on Tuesday.

"Two terrorists have been eliminated by the security forces," the Indian army said in a statement.

"Rifles, ammunition and other war-like stores have been recovered from the terrorists," it said.

Indian media reports said five members of the security forces were wounded.

The firefight took place in southern Kashmir's Kulgam district.

Rebels have fought Indian forces for decades, demanding independence or a merger with Pakistan.

At least 500,000 Indian troops are deployed in the region, battling an insurgency that has killed tens of thousands of civilians, soldiers and rebels since 1989.

India regularly accuses Pakistan of supporting and arming the rebels, a charge Islamabad denies.

The territory has been without an elected local government since 2019 when its partial autonomy was cancelled by Prime Minister Narendra Modi's government and it was brought under New Delhi's direct rule.

Nearly nine million people are eligible to vote to elect the region's local lawmakers. Results are expected on October 8.

Modi campaigned in the territory on Saturday.

"The terror mentors know that if they do anything wrong, Modi will find them even in the netherworld," he said, referring to himself in the third person.

More than 50 soldiers have been killed in clashes in the region over the past two years, mostly in Hindu-majority Jammu district.