The encounter ensued after a police team went to search a house after getting information that extremists were hiding in it.
The injured have been shifted to a hospital in Srinagar.
Militants have been frequently attacking security bases in Kashmir since the 1990s, when there was a full-blown insurgency against Indian rule in a region over which India and Pakistan fought two of their three wars.
The Himalayan region is one of the world's most militarised zones, with India deploying more than 1.3 million troops to quell the rebellion that triggered off in 1989.
--ANI (Posted on 07-01-2014)