India hunts militants in Kashmir as tensions with Pakistan soar

By Fayaz Bukhari and Shivam Patel

SRINAGAR (Reuters) -Armed police and soldiers searched homes and forests for militants in Indian Kashmir on Friday and India's army chief reviewed security there after the killing of 26 men at a tourist site - the worst attack on civilians in nearly two decades.

The attack triggered outrage and grief in India, along with calls for action against neighbour Pakistan, whom New Delhi accuses of funding and encouraging terrorism in Kashmir, a region both nations claim and have fought two wars over.

India's army chief visited Srinagar, capital of Indian Kashmir, and authorities scoured Pahalgam, the scenic town where the attack took place on Tuesday.

India has said there were Pakistani elements to the attack, in which 26 men were shot in a meadow. Islamabad has denied any involvement.

The nuclear-armed nations have unleashed a raft of measures against each other, with India putting the critical Indus Water Treaty in abeyance and Pakistan closing its airspace to Indian airlines.

The treaty, negotiated in 1960, split the Indus river and its tributaries between the two countries and regulated water sharing.

"We will ensure that not a single drop of the Indus River's water reaches Pakistan," Indian Water Resources Minister C.R. Paatil said in a post on X.

Pakistan depends heavily on the Indus system for hydropower and irrigation, and has said any attempt to stop or divert its waters will be an "act of war".

Indian financial markets fell sharply but recovered some of their losses to close 0.7%-0.9% lower. The Indian rupee fell 0.2%, while the yield of India's 10-year benchmark yield rose four basis points.

SOME IN MODI'S PARTY URGE MILITARY RESPONSE

Indian general Upendra Dwivedi visited Kashmir to review security a day after Prime Minister Narendra Modi vowed to chase the perpetrators to the "ends of the earth".

Those killed in the attack came from all over India, Modi said.

India's top two airlines, IndiGo and Air India, said some of their international routes, including to the United States and Europe, would be affected by the closure of Pakistani airspace, leading to extended flight times and costs.

In 2019, India conducted a military strike in Pakistani territory in retaliation for a suicide bombing in Indian-controlled Kashmir that killed at least 40 Indian paramilitary police.

Several leaders of Modi's Hindu nationalist Bharatiya Janata Party have called for new military action against Pakistan.

The two countries both claim Muslim-majority Kashmir in full, but rule it in part. India, with its Hindu majority, has long accused Islamic Pakistan of aiding separatists who have battled security forces in Indian Kashmir - accusations Islamabad denies.

Indian officials say Tuesday's attack had "cross-border linkages". Kashmiri police identified three suspects and said two were Pakistani nationals. India did not elaborate on the links or share proof.

Authorities in Indian Kashmir demolished the houses of two suspected militants, one a suspect in Tuesday's attack, an official said.

Governments in many states ruled by Modi's Hindu nationalist Bharatiya Janata Party have torn down what they say are illegal houses or shops belonging to people accused of crimes, many of them Muslims, in what has come to be known popularly as "instant, bulldozer justice".

In an unrelated incident, sporadic firing was reported along the Line of Control that divides Indian and Pakistani Kashmir, the Indian army said.

(Reporting by Fayaz Bukhari and Shivam Patel in Srinagar, additional reporting by Dharamraj Dutia in Mumbai and Sakshi Dayal in New Delhi, writing by Shilpa Jamkhandikar; Editing by Raju Gopalakrishnan, Alexandra Hudson and Kevin Liffey)