A police spokesman at the scene in the northern state of Punjab said he had witnessed one security officer being shot, and at least six people had been injured in the ongoing siege.
Increased border security
It is unclear who was behind the assault on the police station.
Indian television pictures showed columns of Indian army soldiers taking position around the compound with rocket launchers.
Prime Minister Narendra Modi called for a high-level meeting with senior ministers on the situation and is monitoring the unfolding standoff.
The area is close to the border between India and Pakistan, and also borders the northern state of Kashmir.
"This militancy is a national problem, not a state problem, so it needs to be tackled with a national policy," Singh said.
"If prior intelligence input had been given, they should have properly sealed the borders." he told reporters.
The town of Dinanagar is about 20km from the Pakistani border |
Reports said the gunmen were wearing Indian army uniforms.
"The gunmen crossed over from a border region between India and Pakistan in the Jammu region. There is an ongoing security situation in the area," she said.