The incident happened on Thursday night after over 100 Assam Rifles personnel entered two of the villages on the Myanmar side of the border - Shera and Shashen - in search of 10 NSCN (K) cadres talking shelter in the villages.
However, there have been no reports of any casualties.
The exchange of fire has taken place after the National Investigating Agency (NIA) on Thursday announced Rs.17 lakh bounty for any information on NSCN (K) chief SS Khaplang and the faction's military chief Niki Sumi.
According to sources, the exchange of fire went on for two hours and since the incident another 1,000 Assam Rifles soldiers have arrived in Koki village in Myanmar along the border.
Koki is the neighbouring village of Old Thewati, which is in Indian side along the border, in Nagaland.
Earlier, in a similar incident nine people were killed including civilians when Assam Rifles soldiers open fired at the NSCN (K) cadres in Pangsha area of Indo-Myanmar border on August 28.
The incident happened on the same day a Naga Mothers Association (NMA) delegation was to visit the NSCN (K) to urge them to re join the ceasefire again that they had abrogated after 14 years earlier this year.