The External Affairs Ministry accused Pakistan of targeting Indian military installations in response to Tuesday's counter-terrorism action targeted at the Jaish-e-Mohammed (JeM) that had claimed responsibility for suicide bombing of 40 CRPF troopers in Kashmir.

"Against this counter terrorism action, Pakistan has responded this morning by using its air force to target military installations on the Indian side," Ministry spokesman Raveesh Kumar told the media in the presence of an Air Vice Marshal.

He said the Indian Air Force (IAF) responded instantly and a Pakistan Air Force (PAF) aircraft was shot down by a MiG-21 Bison.

"The Pakistani aircraft was seen by the ground forces falling from the sky on the Pakistan side," he said.

The statement did not say which Pakistani fighter jet was shot down although previous reports had suggested it was an F-16. The aircraft reportredly fell three kilometres inside Pakistan.

"In this engagement, we have unfortunately lost one MiG-21. The pilot is missing in action. Pakistan has claimed that he is in their custody. We are ascertaining the facts," said the spokesman.

Earlier, the IAF scrambled and pushed back Pakistani fighter jets which intruded into the Nowshera sector in Jammu and Kashmir.

An Indian military aircraft, however, crashed in Badgam in Jammu and Kashmir, 7 kilometres from the Srinagar International Airport, police said.

This and the Pakistani action led to the suspension of commercial flights across at least eight cities including Leh, Pathankot, Jammu, Srinagar and Amritsar. But the operations were ordered resumed within hours.

Indian Air Defence Systems have been on maximum alert since Tuesday.

Simultaneously, Indian and Pakistani troops traded heavy fire using mortars and small arms in Jammu and Kashmir's Uri sector, Defence Ministry sources said.

The clash occurred in Kamalkote area.

Intermittent heavy firing was also reported at 40 places on the LoC including Poonch, Rajouri and Jammu districts since Tuesday night.

The Indian attack on the JeM training camp came 12 days after a suicide bomber killed 40 Central Reserve Police Force troopers in the worst terror strike in Jammu and Kashmir since militancy hit the state in 1989.