One terrorist lost his life during an exchange of fire between terrorists and security forces in Chadoora area of Budgam district on Sunday.
"The encounter process is underway and one terrorist has been killed during the cross firing. The operation will continue for a while as an exchange of fire between terrorists and security forces is still going on," Sub Inspector, Central Reserve Police Force (CRPF) Vinay Kumar told ANI.
Mobile internet services have been suspended in Budgam.
The exchange of fire started in the early morning.
Further details are awaited.