At least 12 locals and six troops were injured on Saturday evening, officials say, as the worshippers on the traditional mourning procession of Muharram clashed with troops trying to stop it.
Troops used tear gas and pellet guns on the crowd, which insisted on carrying on with the procession, one in a series held at this time of the year, an Indian official who declined to be named said.
A spokeswoman for India's interior ministry did not respond to a request for comment.
"Reasonable restrictions are necessary for peace and protection of life," India's national security adviser said on Saturday, accusing Islamabad of trying to stoke violence in the region, Reuters reported.
Kashmir, a mountainous Muslim-majority region claimed by both India and Pakistan, has been the site of frequent altercations between security forces and locals protesting against New Delhi's decision to revoke special rights for the portion of the territory that it controls on August 5.
The most recent clashes occurred in Rainawari and Badgam, two Shia majority areas of Srinagar, Indian-administered Kashmir's main city.
The five-kilometer procession route that passes through the city center has been barricaded by armed troops wearing helmets and bullet-proof vests.
On Sunday, police vans fitted with loud speakers announced curfew-like restrictions in Srinagar's city center Lal Chowk and adjacent areas, according to two witnesses.
"People are advised to stay indoors and not venture out of their home," the police announced.
Suhail Ahmed, a Rainawari resident, said that there have been frequent clashes in the area for last three to four days as troops have been trying to block the procession.
"We hear deafening sounds of tear gas being fired for last few evenings. We mostly stay indoors but the gas comes into our homes making it difficult to sleep," Ahmed said.
Muharram is the first month of the year according to the Muslim lunar calendar, and traditionally processions are held for the first 10 days of the month to observe the martyrdom of Prophet Muhammad's (PBUH) grandson, Imam Hussein (AS), in the Battle of Karbala in 680.