Police said the gunfight started in the early hours of Thursday after a search operation was launched in Dalipora, a village in south Kashmir. Three militants, including a Pakistani commander, and an Indian soldier, were killed, presstv.ir reported.
Villagers said a civilian, who they identified as Rayees Ahmad Dar, was also killed after Indian troops had sent him to search a house where militants were believed to be hiding.
A police spokesman said Dar had been killed in indiscriminate firing by militants, and denied he had been sent on a search.
Following the clashes, villagers threw rocks at security forces who responded with teargas, while lawyers in the state’s high court went on strike in protest at Dar’s death.
In response to the killings, Kashmir’s main separatist political group, the Joint Resistance Leadership, called for a general strike in the Muslim-majority region on Friday.
“Even in the holy month of Ramadan there is no letup in killings and bloodshed in Kashmir as civilians, armed youth or even Indian forces are getting killed,” the statement read.
Separately on Thursday, police said seven people had been detained and a curfew imposed on a town in the region after a Muslim man transporting horses was shot dead, allegedly by a Hindu group wanting to protect the rights of cows, an animal considered sacred in their religion.
Witnesses said he was one of the three men confronted overnight by the group on the outskirts of Bhaderwah town.
Tensions have been running high ever since a Pakistan-based militant group claimed responsibility for a car bomb attack on a military convoy in Kashmir that killed at least 44 Indian forces in February.
Prime Minister Narendra Modi gave troops a “free hand” to respond to the attack, and near-daily searches in villages in Kashmir since then have often triggered violent confrontations.
Modi’s tough response to the bomb attack, which included an airstrike against what India said was a militant camp in Pakistan, is believed to have given his party a boost in a general election that began on April 11 and ends on May 19.
Kashmir has been split between India and Pakistan since partition in 1947. Both countries claim all of Kashmir and have fought three wars over the territory.
New Delhi and Islamabad started barter trade across the de facto border in 2008 as part of peace efforts, however, disputes often disrupt the trade.
In 2015, India briefly suspended cross-border trade with Kashmir after it arrested a Pakistani truck driver on charges of drug trafficking.
The latest move comes after India removed the “Most Favored Nation Status” granted to Pakistan under World Trade Organization rules in response to the February attack.