Security forces fired tear gas and used batons to break up hundreds of protesters who say Hindus are fighting with Muslims in the Indian-administered portion of Kashmir, police said.
According to Prabhakar Tripathi, a spokesman for the Central Reserve Police Force, the protesters hurled rocks at police and paramilitary soldiers at several places in Srinagar, while chanting "we want freedom" and "Indian forces leave Kashmir".
Despite the army's efforts to clear the road, hundreds of trucks are stranded on the 300km highway to the valley that is the only surface link between Kashmir and the rest of India, traders say.
Hospitals in Kashmir valley say they are running out of medicine due to the blockade and fear a rise in deaths of children and elderly. And farmers are complaining their produce is rotting as they cannot transport it to New Delhi and beyond.
Kashmiri Muslim protesters say they are being targeted in Jammu, the only Hindu-majority city in the state, with Hindu groups attacking their shops and homes and chanting slogans demanding Muslim Kashmiris leave the area.
They say Indian security forces are not doing enough to protect them.
Anger between Hindus and Muslims in the Himalayan region has flared since June when the government of Jammu and Kashmir decided to award 99 acres of land to the Shri Amarnath Shrine Board, a trust that maintains the Amarnath shrine, a revered Hindu site.
The state government was forced to revoke the land transfer last month after a week of often violent protests by Muslims who called the move an attempt to build Hindu settlements in the area and alter the demographics in the state. Six people were killed and hundreds wounded in those protests.
The reversal of the government decision triggered massive streets protests by Hindus in Jammu and Samba, a town on its outskirts.
But some analysts believe the move was politically motivated, aimed at winning Hindu votes in state polls due in September or October.
The state government collapsed over the issue last month after its main ally withdrew support and the scenic region has been put under federal rule.
The row has given new life to separatist movements and stoked divisions in Kashmir, which was enjoying a lull in violence against the backdrop of India's peace process with Pakistan to settle the region's future.