Pakistan says it has shot down two Indian military jets and captured a pilot in a major escalation between the nuclear powers over Kashmir.
India said it lost one MiG21 fighter and a pilot was missing in action.
Pakistani PM Imran Khan said the two sides could not afford a miscalculation with the weapons they had.
India and Pakistan – both nuclear-armed states – claim all of Kashmir, but control only parts of it.
They have fought three wars since independence from Britain and partition in 1947. All but one was over Kashmir.
The aerial attacks across the Line of Control (LoC) dividing Indian and Pakistani territory are the first since a war in 1971.
They follow a militant attack in Kashmir which killed 40 Indian troops – the deadliest to take place during a three-decade insurgency against Indian rule in Kashmir. A Pakistan-based group said it carried out the attack.
The BBC’s Soutik Biswas, in Delhi, says the challenge for India and Pakistan now is to contain the latest escalation before things get completely out of control.
Pakistan’s military spokesman says there is only one Indian pilot in the custody of the Pakistani army. Officials had previously said two pilots had been captured and one had been taken to hospital.
Major General Asif Ghafoor said Wing Commander Abhinandan was being “treated as per norms of military ethics”.
Earlier Pakistan’s information ministry published but subsequently deleted a video showing the pilot – blindfolded and with blood on his face – identifying himself to soldiers.
Another video circulating on social media appeared to show the pilot being beaten by residents in Pakistan-controlled Kashmir before the arrival of Pakistani soldiers.
Pakistan’s information ministry also tweeted what it said was footage of one of the downed Indian jets.
In India, Ministry of External Affairs spokesman Raveesh Kumar acknowledged the loss of a jet and its pilot.
He also said that an Indian plane had shot down a Pakistani fighter jet and Indian ground forces observed it falling on the Pakistani side of the LoC. Pakistan has denied any of its jets had been hit.
In a televised address, Prime Minister Khan offered India talks over terrorism and warned against further escalation.
“If we let it happen, it will remain neither in my nor Narendra Modi’s control,” he said.