They were arrested on Tuesday morning after the locals handed over to a police team.
The duo, identified as Brasan Doimary and Alhen Doimary were demanding ransom in Tengabari area under Balijan police station, Papum Pare SP P N Khrimey said today.
They were allegedly serving extortion notices to businessmen of the area.
Brasan hails from Gohpur area while his accomplice Alhen was from Udalguri in neighbouring Assam, the SP said.
State Home Minister Tanga Byaling Arunachal today lauded the public of Balijan for overpowering the extortionists with the help of local police.
"Cooperate with the police in your own interest. The police force is alert and alive to such issues," he said.
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