The army's Chinar Corps reported Wednesday a "heavy exchange of fire" with gunmen they said were part of an "infiltration bid" at Baramulla, saying it had seized large quantities of weapons and ammunition.

"Two terrorists have been eliminated", the army said.

Muslim-majority Kashmir has been divided between nuclear-armed rivals India and Pakistan since their independence in 1947, with both claiming the territory in full.

India has an estimated 500,000 soldiers permanently deployed in the territory.

Rebel groups have fought for decades demanding independence for Kashmir or its merger with Pakistan.

Security forces are undertaking a major manhunt after gunmen in the popular tourist spot of Pahalgam slaughtered at least 26 people on Tuesday, the region's deadliest attack on civilians since 2000.

Fighting has decreased since 2019, when Prime Minister Narendra Modi's government cancelled the partial autonomy of the territory and imposed direct control from New Delhi.