A civilian suffered injuries in the crossfire, a police spokesman said.
Security forces launched a cordon-and-search operation in the Kandi belt of Aglar area in Pulwama district in south Kashmir following information about the presence of some terrorists, the spokesman said.
He said the search operation led to a gun battle after the terrorists fired towards the security forces' positions.
"The exchange of fire between the two sides is going on," he added.
On November 2, two Army soldiers were killed and a CRPF jawan suffered injuries in an encounter with terrorists at Samboora in Pampore area of Pulwama. The encounter had ended with the gunning down of a terrorist.