The Rajasthan government has declared a compensation of Rs 1 crore for Inspector Periyapandi's family.
He was on a special operation to catch the mastermind of an audacious heist in the state's Pali district.
Inspector Periyapandi was leading a special team formed to crack a burglary that took place in Chennai last month.
Last month, a gang of alleged burglars drilled a hole through the ceiling of a jewellery shop in Chennai and escaped with 3.5 kg of gold and 5 kg of silver worth lakhs of rupees in the middle of the afternoon, when the shop owner had locked up and gone for lunch
Four people were arrested in this case. The mastermind, however, managed to escape to his home state of Rajasthan. He left with a major share of the loot.
After fleeing, Nathuram Jat started threatening the owner of the jewellery shop on the phone and asked him to get the rest of his gang members released from the jail.
Inspector Periyapandi led a special five-member police team who went to Rajasthan to track down Nathuram Jat.
In Pali's Jaitaran, about 238 km from Jaipur, the Chennai police team reached a brick kiln in the middle of the night. Led by Mr Periyapandi, when the team went in, a clash broke out where the women of Nathu Ram's family allegedly attacked the police team. While the rest of his team got out of the kiln, Mr Periyapandi chose to stay on.
Local police said the inspector was shot at with his own service revolver
"We are not sure of the exact sequence of events, but the police inspector received a bullet through his armpit and it appears to have been with his own service revolver forensic investigation will further establish what exactly happened," said Deepak Bhargav, a senior police officer in Pali.
The incident is seen to be eerily similar to a new Tamil film called "Dheeran" which is about a gang of robbers from Rajasthan.
Mr Periyapandi had joined the police force in 2000 and was promoted to his present rank in 2014. His body will be flown to Chennai on Thursday
The Rajasthan government has declared a compensation of Rs 1 crore for his family and has promised to pay for the education of his two sons, one of whom is still in school.