Rebels and Indian police clash in Kashmir
"The fighting erupted when police raided a suspected hideout on a tip-off," said a federal police spokesman.
"We believe at least two militants are holed-up inside a residential house ... near the university. We have cordoned (off) the house and the area," said spokesman Bisht, who uses one name.
There were no immediate reports of casualties.
The university lies on the outskirts of Kashmir's summer capital, Srinagar, and was closed for a public holiday marking the last Friday of the Muslim fasting month of Ramadan.
Meanwhile, Indian troops shot dead two militants in southern Doda and northern Baramulla district late Thursday, police said.
Kashmir is in the grip of a 17-year-old insurgency that has so far left more than 44,000 people dead.