Two suspected terrorists, including a Bangladeshi, were gunned down and explosives recovered from their possession by the Maharashtra's Anti-Terrorist Squad (ATS) in Thane district on Tuesday night.

Acting on a tip-off, ATS personnel laid a trap for the duo on the Kashimeera-Bhayandar Road and asked them to surrender, a senior ATS official said.

The two, however, fired on the police party, which retaliated, he said, adding the duo were seriously injured in the exchange of fire and rushed to nearby Borivali's Bhagwati Hospital, where they were declared dead on admission.

Two kilogram of RDX, fake currency in lakhs and two firearms were seized from the duo, he added.

A Bangladeshi passport was recovered from one of the deceased, who was identified as Mohammed Ali. His accomplice has been identified as Babu and the ATS suspects he too hails from the neighbouring country, he said.

At least one bag carried by the duo is lying at the spot of the incident and personnel from Bomb Detection and Disposal Squad were called to ascertain its content, he said.