Inspector general of police Danish Rana said the two men had abandoned the force to join militant group Lashkar-e-Taiba. "We were on hot pursuit against them. Today we eliminated them in a joint operation with the army," Rana told AFP.
Both were former rebels who had been recruited as Special Police Officers (SPOs), one in 1999 and the other in 2006.
SPOs are mostly former rebels who have surrendered or served time in prison, and are mostly used in counter-insurgency work.
They are paid less than regular officers and there have been previous cases of them deserting the force — earlier this year, an SPO guarding the residence of a local minister deserted his post to join Hizbul Mujahideen.
Rana said the brief gun battle took place in the mountainous area of Doda, 175 kilometres (110 miles) southeast of Srinagar.
Kashmir has been divided between India and Pakistan since the end of British colonial rule in 1947. Both claim the disputed territory in its entirety.
For decades, several rebel groups have fought hundreds of thousands of Indian forces deployed in the region, for independence of the Himalayan territory or merger of its Indian-administered portion with Pakistan. The conflict has left tens of thousands, mostly civilians, dead.
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