A gunbattle broke out between two armed men and security forces outside a high security space centre in Bangalore early on Tuesday, the Indian Space Research Organisation (ISRO) said.
The gunbattle occurred in Byalalu, on the outkirts of IT hub Bangalore.
The Home (Interior) Ministry sees ISRO buildings as a high priority target for militants, and has beefed up security around them after warnings of possible attacks.
"Two people were seen moving in a suspicious manner outside our centre," ISRO spokesman S Satish said.
"The police immediately challenged them, and they opened fire in retaliation. The shootout continued for some time before the two men fled."
"The police is investigating. It is up to them to see whether it was a terror attack," he added.
(Reporting by Habib Beary)