After a period of relative calm, Muslim militants fighting Indian rule have stepped up attacks across Kashmir, where officials say more than 47,000 people have been killed in 20 years of anti-India insurgency.
No militant group has claimed responsibility for Friday's attack, which killed a policeman and a civilian and took place in the busy Sopore town north of Srinagar, Kashmir's summer capital.
They fired indiscriminately on police station before throwing a grenade, Mohammad Ashraf, a witness, told Reuters. I saw people were running for cover.
Mainly Muslim Kashmir is at the core of decades of hostility between India and Pakistan and the cause of two of the three wars they have fought since independence in 1947. The region is divided between the two countries, who both claim it in full.
On Thursday two militants and two Indian soldiers were killed in a fierce gun battle in south Kashmir, police said.
Indian intelligence officials say violence may be on the rise in Kashmir because hundreds of Pakistan-based militants could have sneaked into India in the past few months.
Sixteen people, including eight militants, have been killed in the first fifteen days of this year, police said.
(Reporting by Sheikh Mushtaq; Editing by Matthias Williams and Alex Richardson)