Three policemen were killed after poachers opened fire on them in Guna district of Madhya Pradesh in the wee hours of Saturday, while two of the assailants were also killed, officials said.
One of the accused was believed to be killed in retaliatory fire by the policemen, while another was killed in an encounter with police later in the evening, they said.
The administration also demolished the houses of some of the accused.
Chief Minister Shivraj Singh Chouhan held a high-level meeting after the incident, and announced financial assistance of Rs one crore each and government jobs for the next of kin of the slain policemen.
He also transferred Inspector General of Gwalior zone Anil Sharma for "delay" in reaching the site of the incident.
The incident took place on Sahrok Road near Saga Barkheda village under the jurisdiction of Aron police station, 60 km from the state capital, around 3 am, said state home minister Narottam Mishra.
The police personnel had gone to the area after receiving a tip-off about the presence of poachers there, he said.
"As the police personnel surrounded them from all sides, the poachers opened fire. Three policemen were killed in the firing," he said.
The slain policemen were identified as sub-inspector Rajkumar Jatav and constables Nilesh Bhargava and Santaram Meena.
Santosh Giri, driver of the private vehicle in which police were travelling, was injured in the incident and undergoing treatment at the district hospital, said Superintendent of Police Rajiv Kumar Mishra.
Police sources said that body parts of five black bucks and a peacock were recovered from the spot.
A meeting was held at the chief minister's residence following the incident.
"Our police personnel sacrificed their lives while stopping the poachers in Guna. By giving the status of martyrs to these policemen, their families will be given ex-gratia of Rs one crore each. One family member of each martyr will be given a government job," CM Chouhan said in a statement.
"The criminals involved in the incident have been identified. The body of a man killed by a bullet was also recovered from a nearby village. But further investigation is underway. Strict action will be taken against the criminals to set an example," he added.
The IG Gwalior would be transferred immediately for delay in reaching the spot after the incident, he added. The state home department subsequently issued a transfer order. D Srinivas Verma would replace Anil Sharma, it said.
The accused were identified as residents of village Bidhoria, 35 km from the district headquarters under Raghogarh Police Station area, said SP Mishra.
During door-to-door search in Bidhoria, the body of one Naushad with a bullet wound in the chest was found hidden in his house by the family members, the police official said.
Subsequently, all the accused were identified, he said, without disclosing their names as the manhunt was still on in the area.
One of the accused was killed in an encounter near Raghogarh with police in the evening, the SP added.
As per the sources, the accused were out on a hunt to obtain the meat of wild animals for a wedding feast in Naushad's family.
The houses of some of the accused were demolished by the administration.
The last rites of constable Nilesh Bhargava were performed in Guna with state honours in the presence of Minister in-charge of the district Praduman Singh Tomar and Raghogarh Congress MLA Jaivardhan Singh.
Heavy police deployment in MP town after group clash
BJP leader's son in MP intervenes in fight, killed
MP police to register case against Amazon officials
MP: Bullet hits SP, 77 booked for Ram Navmi violence
MP Police defends stripping journalist semi-naked