Eight other settlers were wounded in the attack late Tuesday near the village of Simnachara in Tripura state, where several tribal groups have been pushing to expel tens of thousands of migrants from the neighboring state of West Bengal.
The tribal groups accuse the Bengali settlers of exploiting Tripura's rich resources and depriving its indigenous population of the economic benefits. Simnachara is about 15 miles north of Agartala, Tripura's capital.
No group immediately claimed responsibility, but a police officer at Agartala blamed the attack on the All Tripura Tiger Forces, an outlawed rebel group that has been fighting for a separate tribal homeland.
Dozens of ethnic militant groups operate in India's seven northeastern states. Some have been fighting for more than 50 years for autonomy or independence. They accuse the federal government of neglecting the local economy and doing little to stop outsiders from exploiting the region's rich timber and mineral wealth.