PAKISTAN has pledged to set free a fighter pilot who was shot down over Kashmir and beaten by locals after relenting to Indian outrage over him being paraded on TV.

Amid a major escalation between the two nuclear powers over the disputed Kashmir region, a Indian pilot was yesterday captured alive after his aircraft was downed by Islamabad.

The current conflict at the border dividing Indian and Pakistani territory in Kashmir is the first since a war in 1971 which saw more than 11,500 soldiers killed.

Troops on both sides were last night locked in gun battles as Indian and Pakistani officials lashed out online and world leaders urged for peace.

This morning huge crowds gathered in Pakistan demanding more aggression while Indian protesters burned Pakistan's national flags outside its embassy in New Delhi.

The heightened tension comes after footage circulated of Indian Air Force pilot Varthaman being savagely attacked by residents in Pakistan-controlled Kashmir shortly after he was blasted out of the sky.

A 'VULGAR DISPLAY'
Pakistani soldiers appear to intervene by creating a barrier to stop locals punching and kicking him.

The clip prompted a furious response from India, with officials condemning the image as a "vulgar display of an injured personnel".

Hitting back, Pakistan's military spokesman Maj Gen Asif Ghafoor insisted the pilot was being "treated as per norms of military ethics".

More footage then surfaced showing Varthaman without a blindfold, sipping tea after being cleaned up.

We are ready to hand over the Indian pilot if it leads to de-escalation.

He looks in good spirits and thanks his captors for a "fantastic" cuppa, and said he was being taken care of by the Pakistan army and expected the same gesture for any Pakistani officer by the Indian army.

It was in stark contrast to the earlier video circulated by the military of Varthaman in which he was blindfolded, with his feet and hands tied and blood running down his face - seemingly in violation to Geneva Convention rules that prohibit public displays of prisoners.

The Hindu Times newspaper quoted one of the Varthaman's relatives urging the government to "secure his release" without delay.

However, Pakistan PM Imram Khan today said: "We are releasing the Indian pilot as a goodwill gesture tomorrow."

KASHMIR CLASHES
Nuclear war fears grew as Pakistani Prime Minister Imran Khan made a chilling nuke hint as a war of words emerged between officials in both countries on social media.

During a televised address, Khan asked the chilling question: "Can we afford any miscalculation with the kind of weapons that we have and you have?"

The statement came on a day when both sides had shot down each others warplanes.

Before the planes were downed India had blasted what it said was a military camp in Pakistan as retaliation for a suicide bombing that killed at least 40 Indian troops in Kashmir.

A Pakistan-based group claimed the attack - the deadliest to take place during a three-decade insurgency against Indian rule in Kashmir.

What is the Kashmir conflict about?
The region of Kashmir has always been a contentious issue even before India and Pakistan won their independence from Britain.

The local ruler of the region chose India because Kashmir was free to accede to either India or Pakistan.

Many people who live in the region do not want to be controlled by India - they want independence or a union with Pakistan.

The inhabitants of Kashmir are more than 60 per cent Muslim making it the the only state within India where they are in the majority.

There has been conflict in the region since 1989 but fresh violence was sparked after the death of a militant leader in July 2016.