An encounter with a group of protestors who are hiding inside a government institute in Pampore, 15 km from Srinagar, has stretched for well over a day.
Explosions and gunshots are being heard regularly from within and around the building.
To confront the attackers, special troops of the Indian army, paramilitary forces and police are present in the area.
However, the officials have yet not cleared the building even after the passage of two days.
Earlier, police say government forces are battling a group of suspected rebels inside a government compound in the occupied Kashmir.
Police say the army and paramilitary soldiers cordoned off a government compound after gunshots were heard near saffron-rich Pampore town on Monday.
One soldier was reported injured in the initial fighting.
This is the second time the three-building complex has come under attack this year after at least a three-day long gunfight in February left three military commandos dead among seven persons.
The attack comes as IHK is experiencing its largest protests against Indian rule in recent years, sparked by the killing in July of a popular commander by Indian soldiers.
The protests and a sweeping military crackdown have paralysed life in IHK.
Read more: Suspected rebels attack government compound in IHK
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