A militant and a woman passerby were killed in a shootout at a crowded marketplace in Imphal, near the Manipur Assembly on Thursday morning.

Four people were also injured when an unidentified militant armed with an automatic weapon was chased by a security team in the market area around 11 am, police said.

"The area was crowded with shoppers and vendors when the militant opened indiscriminate gunfire seeing a security team. In the ensuing gun battle, the militant and a civilian woman were killed," a police official said.

The identity of the militant was not immediately known. It is believed that the militant was trying to take the shopping complex hostage.

"We are not sure why the militant was moving in the market area with arms. There are some reports that the lone militant was planning to take people hostage at a shopping complex although we are still investigating the incident," the official said.

The shootout led to panic in the area, with shops downing their shutters.