AFP/ Srinagar

Three civilians were killed Saturday in Indian-controlled Kashmir when the car they were travelling in was hit by a mortar shell fired by Pakistani soldiers, police said, as the rival nations continued to exchange heavy fire across their de facto border in the disputed territory.

Twenty others were injured, some seriously, as mortar shells landed in the border village of Balakote, 200 kilometres south of the main city of Srinagar.

"The three died when their car was hit by a shell fired from the Pakistani side. Twenty are injured, some of them had to be flown to a hospital in Jammu (the nearest city)," inspector general of police for the region, Danesh Rana, told AFP.

India and Pakistan, the nuclear-armed South Asian rivals have been exchanging heavy intermittent fire across the Line of Control almost daily for a week. The military action continued even as the two countries were celebrating their independence from Britain in 1947 over the weekend.

Kashmir, the Himalayan territory which is ruled separately by India and Pakistan, has been divided between the two countries since the end of British colonial rule in the sub continent but is claimed in full by both.

The bitter rivals signed a border ceasefire agreement in 2003 which has largely held, but both report violations, frequently accusing each other of unprovoked firing across their border.

Since 1989, several rebel groups have been fighting hundreds of thousands of Indian forces deployed in region, for independence or a merger of the territory with Pakistan.

The conflict has left tens of thousands, mostly civilians, dead.

While relations between the two neighbours Indian and Pakistan remain chilly, their respective national security advisors are scheduled to meet in the Indian capital New Delhi on August 23 as a confidence-building measure following their premiers' summit meeting in Russia in July.