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On Tuesday, India said its Air Force conducted strikes against a militant camp in Pakistani territory. That attack killed a “very large number” of terrorists, trainers and senior commanders belonging to the Jaish-e-Mohammed, according to New Delhi.

India’s response came after the group recently claimed responsibility for a deadly attack in India-controlled Kashmir where more than 40 security officers were killed. That suicide car bombing prompted a barrage of international criticism toward Pakistan for failing to crack down on terror groups operating on its soil.

For its part, Islamabad denied there were any casualties from India’s Tuesday strike.

On Wednesday, Pakistan said its Air Force carried out strikes along the so-called Line of Control to demonstrate its “right, will and capability for self defence.” The Line of Control is the de facto border between the Indian and Pakistani parts of the former princely state of Jammu and Kashmir.

Then, according to a spokesman for the Pakistan armed forces, Indian planes entered Pakistani airspace and two jets were shot down. One of the aircraft fell on India’s side of Kashmir, while the second came down in Pakistani-held territory, and its pilot was captured, the spokesman said.

An Indian External Affairs Ministry spokesman acknowledged that one pilot was missing and a combat jet had been lost. That spokesman also claimed a Pakistani jet had been shot down in the altercation.

Kashmir has always been a sensitive topic for both countries, which have fought two wars over the mountainous region. In 2014, forces from Pakistan and India exchanged fire in border clashes.

Tuesday’s attack was the first time India has used airstrikes inside Pakistan since 1971. Moreover, the area it struck — Balakot — was well outside Pakistani Kashmir and beyond the Line of Control.

Since the terrorist attack earlier this month, Indian Prime Minister Narendra Modi has been under pressure from his base to respond with force ahead of a parliamentary election due to take place by May.

“That India entered Pakistan’s airspace is a clear indication that it is willing to do whatever it takes to keep India safe, which, I suspect, caught Pakistan off-guard,” Akhil Bery, analyst for South Asia at political consultancy Eurasia Group, told CNBC on Tuesday.

Dhruva Jaishankar, a fellow in foreign policy studies at Brookings India, said India has faced a series of terrorist attacks since the 1990s from groups and individuals based in Pakistan. The challenge for both sides has always been about how to respond to provocations from its neighbor, especially after each country became a nuclear power.

Jaishankar told CNBC that both countries have tested the limitations of how far they can escalate the conflict before reaching a “nuclear threshold.”

To be clear, escalating tensions to the point of nuclear conflict would be catastrophic for both India and Pakistan and would destabilize the entire region — an option unlikely to be taken by either New Delhi or Islamabad.

For his part, Pakistani Prime Minister Imran Khan’s sway with the country’s influential military is limited. The way Khan handles this week’s situation will be a big test of his leadership, according to Moeed Yusuf, associate vice president for the Asia Center at the United States Institute of Peace.

“You have a new leader in Pakistan who (has to) show that he is strong and willing to stand up to India,” Yusuf told CNBC. “He must also follow the army’s lead and so if the army decides to escalate, he won’t be able to say much to them right now.”

For Modi, meanwhile, it would be “political suicide” if he walked back on the conflict at this stage — when it may appear to outside observers that India and Pakistan had evenly matched each other’s force, Yusuf said.