An Indian newspaper also reported police had uncovered a plot by a crime boss accused of masterminding an attack on a U.S. cultural centre in Calcutta to link up with Pakistani-based militants for a wave of "terror strikes" across India.
India and Pakistan are locked in a dangerous military standoff over New Delhi's accusation that Islamabad sponsors "cross-border terrorism" against it, a charge Pakistan denies.
The nuclear powers have massed a million men along the border from Kashmir down to the Arabian Sea and India says it will not pull back until Pakistan stops rebel incursions and hands over 20 alleged criminals and terrorists.
The Indian defence official also said three more separatists, members of the now-banned Pakistan-based Lashkar-e-Taiba, were killed in another clash in Kashmir late on Tuesday.
India blames Pakistan-based Kashmiri separatists for the December 13 attack on its parliament which triggered the standoff and fears of war with Pakistan and says they were also involved in last week's attack at the American Center in Calcutta.
CRIME BOSS, MILITANTS JOIN FORCES
Wednesday's Hindustan Times said the crime boss India accuses of masterminding the Calcutta attack had linked up with the groups and planned a wave of strikes, including assassinating India's top missile scientist.
Citing a secret New Delhi police document, the daily said Farhan Malik, alias Aftab Malik and Aftab Ansari, traded access to his criminal network across India for weapons and training.
Some of Farhan's men were trained in Pakistan by the Lashkar-e-Taiba, one of two Islamic militant groups India blames for the parliament attack, in which 14 people died.
The paper said Farhan plotted to kill scientist A.P.J. Abdul Kalam, known as "Missile Man," attack an atomic research centre in India's commercial capital, Bombay, and kidnap cricket captain Saurav Ganguly and star batsman Sachin Tendulkar.
Tendulkar was to be ransomed and Ganguly held to force the release of a jailed Lashkar guerrilla. Although Farhan, subject of an Interpol arrest warrant, is based in Dubai, he is now in Islamabad, the paper quoted the Crime Branch document saying.
Officials say Farhan's group and Lashkar also staged last week's raid on the American Center in which four policemen died.
POLICE KILL PAKISTANIS
Indian police said they killed on Monday two Pakistani Lashkar members who took part in the Calcutta killings. India says the five parliament attackers were also Pakistani.
Under pressure from India, the United States and other world powers, Pakistan has outlawed Lashkar and four other militant groups operating on its soil and fighting Indian rule in Kashmir, the mainly Hindu but secular nation's only Muslim-majority state.
But India says it has yet to be convinced of Pakistan's commitment to action. Military analysts say most of the clashes on the border in Kashmir happen as Pakistani forces try to cover infiltrators or Indian troops try to stop them.
India says an average 200 guerrillas sneak into Kashmir from Pakistan each month, although numbers fall as winter sets in.
About a dozen groups are fighting
India's rule in Kashmir, the cause of two of the three India-Pakistan wars
and where authorities say 33,000 people have died in 12 years of rebellion.