An Indian soldier was killed on Friday during a gunbattle with Kashmiri fighters amid panic among residents over reports of India's deployment of thousands of more soldiers to the disputed region.

Police say fighting erupted on Friday after police and soldiers cordoned off a village in the southern Shopian area in occupied Kashmir on a tip that Kashmiri fighters were hiding there.

As the news of the fighting spread, anti-India protests and clashes broke out in solidarity with the Kashmiri fighters.

Panic has gripped occupied Kashmir since last week after India announced deploying at least 10,000 more soldiers to one of the world's highest militarised areas.

The troop build-up has sparked fears in occupied Kashmir that New Delhi is planning to scrap an Indian constitutional provision that disallows Indians to buy land in the Muslim-majority region.