A police spokesman said the slain militants belonged to Lashkar-e-Taiba, the Pakistan-based group blamed by India for the 2008 Mumbai attacks that killed more than 160 people.
Security forces engaged the three gunmen in the southern Kashmiri district of Rajouri on Saturday and the encounter only ended in the early hours of Monday morning.
Indian-administered Kashmir has been the scene of a bitter Muslim insurgency since 1989 that has left more than 47,000 people dead according to an official count.
In the past, the holy fasting month of Ramazan, which began Thursday, has often seen increased violence in Kashmir.
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