Indian villagers living close to the border with Pakistan are fleeing, one day after India said it launched strikes targeting militants in Kashmir.
India said it conducted "surgical strikes" along the de facto border. Pakistan denied that, saying two of its soldiers died in cross-border shelling.
People from a number of villages in Punjab state were leaving amid fears the confrontation might escalate.
Disputed Kashmir has been a flashpoint for decades and has sparked two wars.
Analysts say India has previously conducted more substantial strikes without any serious escalation of hostilities.
Relations between India and Pakistan have sharply deteriorated since earlier this month, when militants carried out the deadliest attack on an Indian army base in Kashmir in years. India blamed the attack on Pakistan, which denied the claim.
What is happening now?
The war of words is certainly escalating. After India said it launched the strikes, Pakistan reported that it had an Indian soldier in custody. The Indian army said he had inadvertently crossed the Line of Control which divides disputed Kashmir.
Meanwhile in neighbouring Punjab state on the Indian side, media reports claimed six border districts and thousands of villagers were being evacuated. Reports said people will be housed in Sikh temples and banquet halls.
However, BBC Hindi's Robin Singh, who visited several villages near the border in Punjab, said most people had opted to stay behind and there had been no official order to leave.
What kicked all this off?
The 18 September attack on the army base in Uri in Indian-administered Kashmir where 18 soldiers died was the deadliest of its kind for years.
Narendra Modi's BJP government, which came to power promising a tough line on Pakistan, has been been under tremendous pressure to retaliate for what many in India believe is state-backed terrorism.
Many observers say the latest move is aimed at placating an angry domestic constituency and sending out the message that Mr Modi is a strong leader.
And many throughout the country hailed the assault as a powerful message to Pakistan.
What does Pakistan say?
Prime Minister Nawaz Sharif criticised the "unprovoked and naked aggression of Indian forces" and said his military was capable of thwarting "any evil design to undermine the sovereignty of Pakistan".
Islamabad says India's stance is a "blatant attempt" to deflect attention from human rights abuses in the region.
More than 80 people, nearly all anti-government protesters, have died in more than two months of violence against Indian rule.
Why is Kashmir so dangerous?
Both India and Pakistan claim Muslim-majority Kashmir in its entirety but control only parts of it.
The territorial dispute between the two countries has been running for over six decades, and two out of the three wars fought between the nuclear-armed rivals have been over Kashmir.
As with every stand-off in Kashmir, many people fear that this could eventually escalate into a major clash between two nuclear-armed states.
But most analysts still believe that is unlikely to happen and that sporadic clashes and diplomatic sabre-rattling are likely to continue.