The guerrillas, linked with the Jaish-e-Mohammad (JEM) group, were killed in Rajpora, south of Kashmir`s main city Srinagar, Brigadier Shivendra Singh told reporters.
The dead included Ahsan Bhai, the "most wanted" Pakistani commander of JEM, who has been operating in Kashmir for a decade and was involved in attacks on Indian security forces.
"Ahsan Bhai, along with his two Kashmiri associates, were trapped in a house in the village late on Friday and were killed in an ensuing gunfight," Singh said after the clash ended late Saturday.
An Indian army major was among those wounded, Singh said.
The house where the militants had taken shelter was razed to the ground during the gunbattle, army officials said.
The deaths followed the killing by police in April of the local Kashmir JEM chief, Sajjad Afghani, in a gunfight along the banks of scenic Dal Lake in Srinagar.
For more than 20 years, militant groups in Indian-administered Kashmir have fought against New Delhi`s rule, killing police and soldiers in the highly militarised Himalayan region.
Violence in Indian Kashmir has been stoked by Pakistan-based groups that send militants over the de facto border that divides Kashmir between the two countries.
But police said Friday the number of violent incidents in Indian Kashmir fell below 100 in the first half of the year, their lowest level since the start of the insurgency in 1989. (S008/K004)
Editor: Kunto Wibisono
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