|Indian forces are on the offensive|
The clash took place in the thickly forested foothills of the towering Pir Panjal range, to the south of Srinagar, capital of Indian-administered Kashmir.
Indian forces say they have been conducting a major operation over the past two months to hunt down separatist rebels inside Indian-administered Kashmir, while also trying to stop others from infiltrating from neighbouring Pakistan.
A police spokesman said the forces had information that the fighters were hiding in the area. When the security forces tried to form a cordon, the fighters opened fire. Three of them were killed in the ensuing three-hour firefight.
India and Pakistan have fought three wars since 1947, two of them over Kashmir.
They came close to war last year over Indian allegations of Pakistani involvement - denied by Islamabad - in an attack on the Indian parliament in December 2001 allegedly by Kashmiri fighters.
But the two countries have now begun reciprocal confidence-building measures, resuming road and air links and restoring full diplomatic ties. These were frozen after the attack on the Indian parliament.