Officers said they believe up to two gunmen were hiding inside the air base in the northern state of Punjab near the border with Pakistan, which came under attack on Saturday.
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He said that the commanding officer of the troops targeted by the blast later died of his wounds, raising the death toll among Indian forces to seven, while four insurgents have died.
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An Indian official said two gunmen were still at large, contradicting reports that the base was secured on Saturday.
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Union Home Secretary Rajiv Mehrishi will brief the media on the attack at 5 pm today giving details about the counter operation.
The airbase was cordoned off and a heavy contingent of police deployed to the area, with elite paramilitary force of the National Security Guard (NSG) and the Guard Commando Force called in.
Indian security officials suspect the gunmen belonged to the Pakistan-based Jaish-e-Mohammed Islamist group.
At least four gunmen entered the living quarters of the base, but were unable to penetrate the area where fighter helicopters and other military equipment are kept, said air force spokeswoman Rochelle D’Silva.
Without recovering their bodies they could not be confirmed dead, he said.
All vital installations and government offices were informed about a likely terror attack and efforts were mounted to track down the terrorists who had earlier killed a taxi driver, he said. The Himalayan region of Kashmir, where rebels have been fighting since 1989 for independence or merger with Pakistan, is divided between India and Pakistan, but is claimed in its entirety by both.
But that appeared premature on Sunday, as the operation resumed to secure the air base that sprawls across an estimated 14 square kilometres and lies just 25 kilometres from the border with historic rival Pakistan.
The attackers are confined to non-operational area, police said.
The terror attack came nearly a week after Modi flew into Lahore, on his way back from Afghanistan, for a surprise meeting with his Pakistani counterpart Nawaz Sharif. In response, 70pc Indians on this online poll supported the peace process despite the terrorist attack.
The breaching of the base’s defences has raised questions about lax security on the worldwide border in Punjab, which is a known route for drug smugglers and is less closely guarded than the disputed frontier running through Kashmir.
On Saturday and Sunday, many Indians reproduced old tweets of Modi in which he questioned the policy of conducting dialogue with Pakistan amid terrorist attacks.
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Based on Friday’s development the army sounded an alert and had placed two-army columns and a special force team in the Pathankot base prior to the attack an army spokesperson in New Delhi said.
