Indian Air Force had scrambled Mirage 2000 fighter jets, with support from MiG and Sukhoi aircraft, in the early hours of Tuesday to drop 1000kg laser-guided bombs on terrorist training camps in Balakot town of Khyber Pakhtunkhwa province in Pakistan.
Pakistan claimed to have detained two pilots who were flying the warplanes - but later changed the figures to just one.
Addressing a press conference, a spokesperson for the Indian MEA said, "We unfortunately lost one MiG-21 in this engagement and an Indian pilot is missing in action". "I'm sorry to hear that one of our fearless IAF pilots is missing".
India today demanded the release of the fighter pilot shot down by Pakistan warplanes after video emerged showing the pilot blindfolded with blood on his face. "The response will come, and response will come differently", he warned the Indian army.
Indian officials said three Pakistani jets had also entered Indian airspace, before being intercepted and forced turned back. "A new Pakistan has been established". War songs were played, commentators praised the Pakistan military and shouts of "God is greatest" could be heard.
File Image of Pakistan International Airlines passenger plane. India also expects his immediate and safe return.
"So far there are no (civilian) casualties but there is panic among people", said Rahul Yadav, the deputy commissioner of the Poonch district where some of the shelling took place.
The latest wave of tensions between Pakistan and India first erupted after Jaish-e-Mohammad claimed responsibility for a February 14 suicide bombing on Indian paramilitary forces on the Indian side of Kashmir that killed more than 40 troops.
The Cyberabad police in Hyderabad has beefed up security in parts of the city in view of the rising tensions between India and Pakistan. An Indian military statement said that "out of anger and frustration", Pakistan initiated an "unprovoked cease-fire violation". "We must not talk about this". The soldier's calm demeanour remained intact.
Bahrain's Gulf Air said it had suspended all fights to and from Pakistan due to closure of airspace while low-priced carrier flydubai said it is reviewing its schedule. Some urged both governments to be cautious and avoid further provocation, but many blamed India for the escalation and expressed defiant bravado.
"History tells us that wars are full of miscalculation".
At time of writing, Modi, who is facing an election this spring, had not yet commented.
Residents on both sides of the de-facto frontier, the so-called Line of Control, said there were exchanges of fire between the two sides through the night into Wednesday morning. "We are coordinating with other forces". "We don't want war, India. One of the aircraft fell inside AJ&K while other fell inside IOK [Indian occupied Kashmir]", Pakistan army spokesman Maj.
Indian airlines including IndiGo, India's biggest airline by market share, low-priced rival GoAir and full-service carriers Jet Airways and Vistara, a joint venture between Singapore Airlines and Tata Sons, were forced to cancel services to at least six cities in northern India due to airport closures.