Official sources said personnel of the Indian Army's 22 RR and the Special Operations Group cordoned off a building in the area in which the militants hid and intensified the search operation. A three-hour-long gunfight followed in which the two militants were killed.
A massive combing operation was still underway when the latest reports came in.
Sources said one of the militants is believed to be Abu Said from Pakistan. One body was recovered from the site, senior defence official Brijesh Pandey said.