Authorities in northern Punjab state said they were evacuating villages within 10 kilometres (six miles) of the border following Thursday's raids, which provoked furious charges of "naked aggression" from Pakistan.
Two Pakistani soldiers killed as India violates ceasefire along LoC
Indian sources said Thursday that commandos had carried out "surgical strikes" several kilometres inside Pakistan on what they called "terrorist" targets.
The dramatic move followed a deadly assault on one of India's army bases in Kashmir that New Delhi blamed on Pakistan-based militants, triggering a public outcry and demands for military action.
Indian and Pakistani troops regularly exchange fire across the disputed border known as the Line of Control (LoC) in Kashmir, but sending ground troops over the line is rare.
Islamabad dismissed the talk of surgical strikes as an "illusion" and said two of its soldiers had been killed in small arms fire. Indian media and sources said Friday that an Indian soldier had been captured after "inadvertently" crossing the LoC in the Himalayan region, although officials on both sides of the border declined to comment.
Pakistan-India tension takes toll on stock market
Prime Minister Nawaz Sharif was due to meet his cabinet on Friday to discuss the unfolding situation, facing international calls for restraint. India and Pakistan have fought three wars since they gained independence from Britain seven decades ago, two of them over Kashmir.
India has also been on a diplomatic drive to isolate Pakistan since the raid on September 18, the worst such attack in more than a decade.
Even before that attack tensions were high in the heavily militarised Himalayan region since the Indian army killed a leading Kashmiri separatist in a gunfight in early July, sparking deadly protests.
Jammu and Kashmir is India's only Muslim-majority state and rebel groups there have for decades fought for independence from Hindu-majority India, or a merger with Pakistan. Officials said some border villages in Indian-held Kashmir had been evacuated as a precautionary measure against possible shelling from the Pakistan side.
Larger-scale evacuations were organised in Punjab state, which neighbours Jammu and Kashmir, where thousands of people were being moved away from the heavily secured border. Images from the state showed people piling bedding and cooking equipment onto trailers and cramming into crowded buses as security forces stood guard.
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The Punjab government said it was setting up special camps for evacuees in the area. The Indian army's surprise announcement Thursday that troops had carried out strikes sent stocks sliding, but the country's media broadly welcomed the move.
The Indian Express called it a "defining moment" but said the government must now be vigilant to ensure that the "clamour for more" did not fuel an escalation in hostilities.
The Hindustan Times welcomed the strikes in a editorial headlined "Befitting response", and said India would "take satisfaction from the revenge, served cold".
Some Pakistani newspapers questioned India's claims to have conducted a "surgical strike". Many carried pictures of the two soldiers on their front pages.
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