The police arrested three Kashmiri students and seized an assault rifle and explosives in a raid at a college hostel in Jalandhar on Wednesday.
Punjab's Director General of Police Suresh Arora described the three students as a module of Kashmiri terror outfit Ansar Ghazwat-ul-Hind and said they had links with Jaish-e-Mohammed.
The students were picked from the hostel of CT Institute of Engineering Management and Technology, located at Shahpur on the outskirts of Jalandhar in a joint operation by Punjab Police and the Special Operations Group of Jammu and Kashmir Police.
The team seized two weapons, including an assault rifle, and explosives from the hostel room of second-semester B.Tech (Civil) student Zahid Gulzar, Arora said in a statement.
Gulzar is a resident of Rajpora in Srinagar.
He was arrested along with two Pulwama residents, Mohammed Idris Shah and Yusuf Rafiq Bhatt.
The DGP said the arrests followed leads about the activities of certain militant organisations and individuals operating in Jammu and Kashmir and Punjab.
A case has been registered at Sadar Jalandhar police station.
He said the busting of the terror module indicated efforts by Pakistan's spy agency ISI to expand the arc of militancy on India's western border.
Recently, another Shopian resident, Gazi Ahmad Malik, was picked up by Punjab Police at Banur in Patiala, where he was studying at a polytechnic.
The DGP said it was learnt that Gazi was closely related to Adil Bashir Sheikh, a J&K special police officer (SPO) who fled with seven rifles from the home of a Peoples Democratic Party (PDP) MLA in Srinagar.
The SPO is suspected to have joined Hizbul Mujahideen, the officer said.
Gazi was later handed over to J&K Police.
(With inputs from agencies.)