Two cadres of the banned militant outfit People's Revolutionary Party of Kangleipak were arrested in Manipur's Imphal West district, the police said on Sunday.
The two cadres, aged 34 and 18, were allegedly involved in extorting businessmen in the state capital Imphal.
Two mobile phones and a two-wheeler were seized from their possession during the arrest on Saturday, the police said.
The state government has recently set up an anti-extortion cell to combat rising extortion cases by underground groups.
IGP (Intelligence) K Kabib earlier said that extortion has reached unprecedented levels over the last 16 months, especially after ethnic violence erupted in May last year.
It is suspected that extortionists have been using weapons looted from police armouries. -- PTI