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5 security personnel, including a policeman who is battling for his life, were critically injured in a gunfight.
Security forces including the army, paramilitary forces, and the J&K Police are aggressively fighting terrorists.
In a landmark move, the Foundation has partnered with the Government Girls Higher Secondary School in Kothi Bagh, Srinagar, marking the beginning of its national operations.
The terrorists are yet to be traced, the officials said.
Five soldiers were killed in the terror attack.
This was the second major incident in Kathua district in the past four weeks.
Two army soldiers, including an elite Para Commando, laid down their lives while battling the terrorists, officials said.
The exchange of fire between the security forces and terrorists is continuing in the area.
Narendra Modi reached J&K on Thursday and will attend the International Yoga Day celebrations on Friday.
The officials said the search operation turned into an encounter after the terrorists opened firing on the security forces.