Kolkata: Indian and Bangladeshi troops exchanged heavy fire, officials said on Saturday, but the two sides told different accounts of the clash across the 4,000-km (2,500-mile) border that divides the usually friendly countries.
Bangladesh accused India of an unprovoked attack.
But a top Indian official said Friday night's border skirmish, the most serious in nearly two months, came after a Bangladeshi smuggler was shot dead by India's Border Security Force (BSF).
BSF Inspector General Somesh Goyal told Reuters that the Bangladeshi, indentified as Mohammad Yousuf, was killed after he attacked an Indian soldier with a knife to evade arrest.
Troops of the Bangladesh Rifles (BDR) then opened fire on a BSF patrol, and Indian forces returned fire.
Goyal said the incident took place at the Gede-Nimatala frontier, about 140 km (90 miles) north of Kolkata, the capital of India's West Bengal state.
Bangladeshi security officials said the clash erupted after Indian soldiers opened fire on a Bangladeshi patrol.
"The unprovoked firing caught us off guard, but we returned (fire) immediately. A heavy exchange of machineguns and mortars continued until early Saturday," a BDR official said.
He said one man was killed and three seriously wounded in the firing, and hundreds of frightened villagers fled their homes.
"The situation is still tense and we are trying to communicate with the Indians for a meeting with a view to stopping further escalation of the incident," the official said.
Goyal said Indian forces found 50 bottles of a cough syrup that is used as a drug and regularly smuggled across the border, along with 4 kg (9 lbs) of marijuana, on the dead man.
"A thick banana plantation between the two sides perhaps prevented BDR personnel from getting a clear view because they started heavy firing immediately after we shot the smuggler," said Goyal, who went to the frontier early on Saturday.
Indian forces tried to contact the BDR on a telephone hotline to explain they had killed a smuggler, but failed, officials said.
"Empty bullet shells are all over the place and the entire area is smelling of gunpowder, as the BDR fired 6,000 rounds of ammunition and even used high explosives, which was totally unnecessary," Goyal said.
"We were lucky that there were no villages nearby or many people could have got injured or even died," he added.
Indian forces said they fired at BDR positions throughout Friday night, and into Saturday morning.