Indian police say security forces are battling a group of gunmen inside a government compound in the Indian-controlled portion of Kashmir.
Police told the Associated Press news agency on Monday that army and paramilitary soldiers cordoned off the compound after gunshots were heard near Pampore town, about 10km outside of Srinagar, capital of Indian Kashmir.
One soldier was reported wounded in the initial fighting.
The attack comes as Kashmir is experiencing its largest protests against Indian rule in recent years, sparked by the killing in July of a popular rebel commander by Indian soldiers. The protests, and a sweeping military crackdown, have all but paralysed life in Indian-controlled Kashmir, with shops, schools and most banks remaining shut and mobile phone and internet services working intermittently.
Kashmir has been divided between rivals India and Pakistan since the end of British rule in 1947. Both claim the territory in full.
Anti-India sentiment runs deep in Kashmir, where rebel groups have fought Indian troops since 1989 for either independence or a merger with Pakistan. More than 70,000 people have been killed since then.
Tension between the nuclear-armed neighbours has soared after an armed attack last month on an Indian army base killed 19 soldiers with the two armies exchanging heavy fire and mortars across their de facto border in Kashmir almost every day.