The rebels, numbering two to three, fired guns and grenades from the government building where they have been hiding since Saturday, said paramilitary spokesman Bhavesh Chaudhary.
Two army captains and a soldier belonging to the army's special forces were killed in the firing on Sunday, said army spokesman Col. Nitin N. Joshi. Two paramilitary soldiers and one civilian were killed Saturday. Another 13 paramilitary troops have been wounded in the standoff.
As an intense gunbattle raged between security forces and the insurgents, a portion of the five-story government building caught fire on Sunday, but the blaze subsided after some time.
The army also flew a drone to monitor the rebel positions.
The standoff started Saturday when the militants fired automatic rifles as they ambushed a convoy of Indian paramilitary soldiers before taking refuge in the nearby government building. They allowed more than 100 civilian government employees to leave the building without any harm.
Anti-India protests and clashes broke out Sunday in several neighborhoods in the saffron-rich Pampore area, where the militants are holed up.
Witnesses and officials said hundreds of youths, chanting "Go India, go back" and "We want freedom," ignored the appeals from police to stay away from the site of the gunbattle and hurled rocks at police and paramilitary soldiers.
Government troops fired tear gas and pellet guns to disperse the protesters. At least three protesters were hospitalized with wounds from pellet guns, police said.
Anti-India sentiment runs deep in Kashmir, where rebel groups have been fighting since 1989 for either independence or a merger with neighboring Pakistan. More than 68,000 people have been killed in the armed uprising and ensuing Indian military crackdown.
India and Pakistan each administer a portion of Kashmir, but both claim the Himalayan region in its entirety. The two rivals have fought three wars, two of them over control of Kashmir, since they won independence from British colonialists in 1947.
(AP)