Based on a tip-off, police teams had set up barricades at different locations to apprehend the smugglers, who were travelling in two jeeps and as many SUVs, on Saturday night.
They opened fire on police at checkpoints at the Kotdi and the Raila police station areas.
Bhilwara Superintendent of Police (SP) Vikas Sharma said, "Two constables were killed in the firing. Police teams have been alerted to search for the accused."
The deceased constables were identified as Unkar Raika and Pawan Chaudhary.
Bhilwara Additional SP Chanchal Mishra said the armed drug smugglers first opened fire at the team in Kotdi, in which Unkar suffered a bullet injury.
She said that barricades were later placed in the district to nab the accused. While crossing the checkposts in the Raila police station area, the suspects again opened fire on police personnel in which constable Chaudhary died.
No arrest has been made so far, Mishra said.
The officer said that a pick-up truck carrying narcotic substances was seized in the Raila police station area while one of the SUVs, which the smugglers were travelling in, was found abandoned.
A case of murder and obstructing government officials from discharging their duty has been registered against unidentified accused at the Kotdi and Raila police stations, she said.
Chief Minister Ashok Gehlot condoled the death of the policemen.
"I pay tribute to two brave soldiers of Rajasthan Police Shri Pawan Chaudhary and Shri Unkar Raika who were martyred in a criminal incident in Bhilwara," Gehlot tweeted.
Meanwhile, opposition BJP has blamed the ruling Congress government for the deteriorating law and order situation in the state.
"Crime is once again in headlines today. Smugglers took the life of brave soldiers in Bhilwara yesterday night. A man was burnt alive in Lohargal, girls were raped in Nagaur. It will better if the government changes the motto of police to ''Trust in criminals, Fear in public''," state BJP president Satish Poonia said in a statement.
Bhilwara BJP MP Bhagirath Chaudhary said they will not let the postmortem of bodies be completed till the status of "martyr" is given to the policemen killed in the attack.
"It is unfortunate. There seems to be no government ruling the state. Policemen are being killed openly. Morale of the police is down. We will not let the postmortem be done till the status of martyr is given to the deceased policemen," Chaudhary said.