The attack was in Kalaban, in the state of Himachal Pradesh, 30km from the border with India's Jammu and Kashmir province, where Muslim militants are waging a rebellion against New Delhi's rule.
As India and Pakistan exchanged fire for a fifth day across their disputed Kashmir border, the Indian Defence Ministry said "foreign mercenaries operating on the behest of Pakistan have been killing innocent civilians in remote areas".
Mr Vajpayee had earlier said he was ready to resume stalled peace talks with Pakistan, but Islamabad must first stop aiding Kashmiri militants. Pakistan denies arming the guerrillas but says it provides moral and diplomatic support.
Separately, Pakistan said its troops had "blasted" an Indian army base at Kazalwan, in northern Kashmir, but an Indian Army spokesman dismissed the claim as "totally false". A defence spokesman said in Srinagar that there had been renewed heavy shelling from the Pakistani side, but there had been no injuries or material damage apart from shrapnel wounds suffered by one soldier.
More than 80 people, mostly civilians, have been killed by artillery fire on both sides since Thursday. The Indian Defence Ministry said six Indian soldiers, two border security personnel and 22 civilians had died on the Indian side.
The Indian Chief of Air Staff, SK Sareen, said in Srinagar that the situation on the Kashmir border was not especially alarming and the firing was a seasonal feature.
"As you know, once the snow melts there is an attempt by the adversary to send in more people ..." he said. "There is no warlike situation: the situation is normal."Reuse content