A jawan was killed when unidentified militants attacked an army patrol in village Shindra in the border district of Poonch in Jammu on Friday evening.
Reinforcements were rushed to the spot and the village was cordoned off, sources said.
The troops also surrounded the village mosque after reports that one of the militants was hiding inside and had taken some civilians hostage. But no one was found inside.
"The militants may have escaped after the initial gun battle. We are still searching the village," said a police officer.