Indian troops and the "infiltrators" were facing off at a distance of around 600 yards, engaged in "controlled firing," Naresh Vijay Vig, a spokesman for the Indian Army, said Monday. He said five Indian soldiers had been injured.

Indian officials say the exchange of fire began two weeks ago, when the fighters were spotted in an abandoned village, Shalbhato, and prevented from advancing farther into Indian territory. Indian troops killed the seven fighters and seized a large cache of arms, including 6 AK-47s, 10 pistols, 4 grenade launchers and 4 rocket launchers, an Army spokesman said Friday.

"They have been stopped," an Army general, Bikram Singh, told reporters in New Delhi. "Some of them have been neutralized. An operation is on to flush them out." India's Defense Ministry described the episode as a "Border Action Team" maneuver, a reference to a unit of Pakistan's Army.

A Pakistani military spokesman denied any involvement.

"No such thing happened at all," the official said, in comments to the Press Trust of India. "This is a blatant lie. We totally deny this baseless allegation."

The flare-up began just as the prime ministers of Pakistan and India met in an effort to de-escalate the tensions, agreeing that senior military commanders should meet to find ways to uphold the 2003 cease-fire along the so-called line of control. It is considered a crucial step toward peace between the two nuclear-armed neighbors.

Though both countries are still formally observing the cease-fire, violence has risen on the border in recent months. In September, three heavily armed militants crossed the Indian border and attacked a police station and an army camp, killing 12 people before Indian troops killed them. That came after the killing of five Indian soldiers at the border and the gruesome discovery in January of the bodies of two Indian soldiers, one of whom was found beheaded. Pakistan also claims that Indian soldiers killed Pakistani troops.

The village of Shalbhato has been empty since the early 1990s, when it was the scene of fierce fighting and most of its residents moved to Pakistan, according to Indian news reports. India then built a border fence along the line of control, which skirts Shalbhato, leaving the abandoned village on the Pakistani side of the fence, though it is in Indian territory.