The militants were killed in the encounter in Katidhar-Gurmul forest area, 190 km from here, late last night, they said.
Acting on a tip-off, troops of 10 Rashtriya rifles launched a search operation in the area, police officials said adding the militants fired on the security personnel.
In the retaliatory gunfire, the security personnel killed the two militants on the spot.
Police recovered arms and ammunition including one self loading rifle, one 3.3 rifle and a digital pistol.
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