Militants attacked an Indian army base in the disputed state of Kashmir on Thursday, wounding three soldiers, as the leaders of India and Pakistan attended a regional summit aimed at boosting trade between almost a quarter of the world's people.
Fighting between the militants and the army was continuing, a senior Indian army officer said.
Four to five militants attacked the army base near the town of Arnia, about four km (2.5 miles) from the border with Pakistan, the officer, who did not wish to be named as he is not authorised to speak to the media, said.
The militants had divided into two teams, with one group heading inside an army bunker and the other holed up inside a house in a village, the officer said.
India and Pakistan fought two of their three wars since independence in 1947 over Muslim-majority Kashmir, which they both claim in full but rule in part.
Indian Prime Minister Narendra Modi and his Pakistani counterpart, Nawaz Sharif, are attending the annual South Asian Association for Regional Cooperation in Nepal and their bickering has meant the leaders have refused to meet each other.
Muslim separatists have been fighting Indian forces in India's part of Kashmir since 1989. India accuses Pakistan of training and arming the rebels in the part of Kashmir it controls and sending them to the Indian side, a claim its neighbour denies.
India and Pakistan exchanged their heaviest gunfire in a decade last month, killing more than 20 people.