India and Pakistan exchanged an escalating series of tit-for-tat diplomatic measures after New Delhi blamed its regional rival for backing a deadly shooting attack in contested Kashmir.

Prime Minister Narendra Modi vowed to hunt down the gunmen responsible for killing 26 civilians in the tourist spot of Pahalgam on Tuesday, accusing Pakistan of supporting "cross-border terrorism."

"I say to the whole world: India will identify, track and punish every terrorist and their backer," Modi said on Thursday in his first speech since the attack in the Himalayan region. "We will pursue them to the ends of the Earth."

Indian police have identified two of the three fugitive gunmen as Pakistani.

The attack at Pahalgam is the deadliest attack on civilians in contested Muslim-majority Kashmir in a quarter of a century.

New Delhi suspended a water-sharing treaty, announced the closure of the main land border crossing with Pakistan, downgraded diplomatic ties and withdrew visas for Pakistanis on Wednesday night.

On Thursday, Pakistan Prime Minister Shehbaz Sharif convened a rare meeting of the National Security Committee with top military officials, including powerful army chief Asim Munir.

"Any threat to Pakistan's sovereignty and to the security of its people will be met with firm reciprocal measures in all domains," a Pakistani statement said.

"In the absence of any credible investigation and verifiable evidence, attempts to link the Pahalgam attack with Pakistan are frivolous, devoid of rationality and defeat logic," it said.

In response to India's accusations and measures, Islamabad is expelling Indian diplomats and military advisers, cancelling visas for Indian nationals – with the exception of Sikh pilgrims – and closing the main border crossing from its side.

Pakistan also warned any attempt by India to stop the supply of water from the Indus River would be an "act of war."

Some fear New Delhi's diplomatic moves may just be an opening salvo – with the potential risk of military action between the nuclear-armed neighbors.

India's air force and navy both carried out military exercises on Thursday, according to an official statement and the PTI news agency.

A soldier was killed Thursday in clashes with gunmen at Basantgarh in Kashmir, the Indian army said.

Pahalgam marks a dramatic shift in recent Kashmiri rebel attacks, which typically target Indian security forces. In 2019, a suicide attack killed 41 Indian troops in Kashmir and triggered Indian air strikes inside Pakistan, bringing the countries to the brink of all-out war.

Indian police say the three gunmen are members of the Pakistan-based Lashkar-e-Taiba group, a United Nations-designated terrorist organization, and offered a two-million-rupee bounty for information leading to each man's arrest.

Modi led two minutes of silence in memory of those killed, all but one of whom was Indian.

"Whatever little land these terrorists have, it's time to reduce it to dust," he said.

Indian security forces have detained many in their vast manhunt for the attackers. (AFP)