Police said the fighting broke out when they tried to intercept a group of suspected fighters late on Monday where the incident occurred in Palamu in Jharkand state, a Maoist stronghold.
“They started firing when we tried to stop them,” Hemant Toppo, deputy inspector general of police in Palamu, said.
“We retaliated and 12 Naxals were killed in the exchange that lasted for almost an hour,” he told AFP, using a local term for the Maoist fighters.
India’s long-running Maoist insurgency began in the 1960s and has cost thousands of lives.
The fighters, described by Manmohan Singh, the former prime minister, as India’s most serious internal security threat, say they are battling authorities for land, jobs and other rights for poor tribal groups.
They are believed to be present in at least 20 Indian states but are most active in forested, resource-rich areas in the states of Chhattisgarh, Orissa, Bihar, Jharkhand, and Maharashtra.
“We have recovered some weapons and bags they were carrying with them,” Toppo told AFP from Palamu, northwest of the state capital Ranchi.
“Some rebels also managed to escape into the nearby forest areas and our teams are now looking for them.”