Bangladesh troops fired rockets at a village and border outposts in India's Assam state prompting heavy return fire from the Indian side yesterday.
One Indian officer said at least 20 border guards had been held captive since Sunday when Bangladeshi troops captured a narrow strip of land Dhaka says India has occupied illegally for three decades.
At least 18 soldiers - 16 of them Indian - were killed yesterday in the worst clashes on record along the 2,500-mile border.
Indian media reports said nine civilians had been wounded by rocket attacks from Bangladesh.
An Indian foreign ministry spokesman said India was seriously concerned about the "unprovoked action" of Bangladeshi troops and had told the Bangladesh envoy in New Delhi.
But in Dhaka Bangladeshi foreign secretary Mr Syed Moazzem Ali played down the incident and said he expected it to be over soon.
"Such incidents happened before . . . and we hope this one will also be resolved through discussion," he said.