Militants attacked an Indian army brigade headquarters near the de factor border with Pakistan on Sunday, killing 17 soldiers in the most deadly such attack in the northern region of Kashmir in recent years.
Four "fidayeen" - or commando-style gunmen willing to fight to the death - were confirmed killed after penetrating the base in Uri near the Line of Control with Pakistan, an Indian army spokesman said.
A police source told the Reuters news agency that the number of soldiers killed in the attack had risen to 17, making the toll far worse than a similar raid on an army base in Punjab state in January that India has blamed on Pakistan-based militants.
The army deployed helicopters to evacuate soldiers who had been injured in the dawn attack that was followed by an hours-long gunfight. The Defence Ministry in New Delhi put the number of wounded at 35.
The raid comes amid heightened tension in India's only Muslim-majority region, which has faced more than two months of protests following the July 8 killing of a popular separatist field commander.
At least 78 civilians have been killed and thousands injured in street clashes with the Indian security forces, who have been criticised by human rights groups for using excessive force including shotguns that fire pellets that have blinded people.
Home Minister Rajnath Singh said in a series of Twitter posts that he had spoken to the region's political and military leadership and had instructed senior officials to monitor the situation.
He canceled planned trips to Russia and the United States.
"We have activated the entire force in and around Uri sector to step up security and launch combing operations," a senior Home Ministry official told Reuters.
"It is clearly a case of cross-border terror attack. We don't know which militant group is involved," this official added.
There has been no claim of responsibility.
The military death toll was the worst in Indian-ruled Kashmir at least since a raid in December 2014, also near Uri which is to the west of the region's main city of Srinagar, in which eight soldiers and three police were killed.
India accuses Pakistan of supporting militant attacks in its northernmost state of Jammu and Kashmir, which they both claim in full but rule only in part.
Prime Minister Narendra Modi recently raised the stakes in their decades-old feud by expressing support for separatists within Pakistan.
Pakistan denies any role in cross-border terrorism, and has called on the United Nations and the international community to investigate atrocities it alleges have been committed by the security forces in Indian-ruled Kashmir.
The United Nations will soon hold its annual general assembly in New York, where Kashmir is likely to come onto the agenda.
Separately, a prominent Kashmiri rights activist has been held in Srinagar after being prevented from catching a flight to a UN Human Rights Council meeting in Geneva.
Relations between the nuclear-armed neighbors have been on edge since the New-Year attack on an Indian air force base in Punjab, near the border with Pakistan, that killed seven uniformed men.
India has blamed a Pakistan-based militant group for that attack but, after initial progress, an attempt to conduct a joint investigation has lost momentum. The two sides have frozen a tentative peace dialogue.