Ludhiana: Two kilograms of heroin worth Rs two crore was recovered and two persons were arrested after an exchange of fire with a gang of drug smugglers, suspected of having links with Pakistan's Inter-Services Intelligence (ISI), police said.

The brief exchange of fire took place near Sahnewal and police managed to nab two of the suspects while the third escaped, police sources said.

A police personnel was injured in the firing and was hospitalised, they added.

Besides the heroin worth Rs two crore in the international market, fake currency worth Rs 20,000 and two revolvers were recovered from the arrested persons.

Their links with ISI and terrorist organisations operating in Jammu and Kashmir are being investigated, the sources said.

PTI