The 'militants' first attacked a frontline base close to the Line of Control (LoC) before moving onto the brigade headquarters at Uri, army spokesman Colonel S.D. Goswami said.
They were armed with grenades and automatic rifles, an army official said on condition of anonymity.
Four suspected militants were also killed during the gunbattle with security forces that saw tents and other temporary shelters for the soldiers catch fire, the army said in a statement. The encounter resulted in “heavy casualties”, the statement said.
On Sunday residents of Uri town saw smoke billowing from the nearby army base after dawn and heard continuous rounds of heavy gunfire, while army helicopters circled overhead.
Soldiers are now searching the base, 100 kilometres west of the region's main city of Srinagar, for any more suspected militants, the statement said.
Several injured soldiers have been airlifted to a military hospital in Srinagar, according to an army officer.
Large numbers of soldiers are stationed at Uri after finishing their tour of duty of the disputed region.
Indian Prime Minister Narendra Modi vowed to punish those responsible for the “despicable” and “cowardly” attack.
“We strongly condemn the cowardly terror attack in Uri. I assure the nation that those behind this despicable attack will not go unpunished,” Modi said in a tweet following the raid
Indian Home Minister Rajnath Singh was holding a high-level security meeting in New Delhi, according to reports, after earlier saying he was cancelling his planned trips to Russia and the United States.
The raid comes months after militants launched an audacious attack on an Indian air force base in Pathankot that left seven soldiers dead in January.
The attack came days after Modi embarked on a landmark 'surprise' visit to Pakistan, raising hopes of improved ties.
Read more: After Modi's surprise visit to Pakistan, next step is obvious – sustained engagement
IHk is in the grip of deadly unrest that has lasted for more than two months. Protesting residents are clashing almost daily with security forces in the worst such violence since 2010.
At least 87 civilians have been killed and thousands injured in the protests against Indian rule, sparked by the killing of a popular Hizbul Mujahideen leader Burhan Wani in a gunbattle with soldiers on July 8.
The Indian government has been coming under growing pressure over the level of casualties during the protests and over the security forces' use of shotguns loaded with pellets which can blind demonstrators.
Thousands of angry demonstrators defied a curfew on Saturday in IHK toattend the funeral of a schoolboy whose body was found riddled with pellets, sparking fresh clashes with security forces.
Soldiers have been deployed in Kashmir for decades and currently number around 500,000. Tens of thousands of people, mostly civilians, have died in the fighting.
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