The dramatic development came a day after they "impeached" Speaker Nabam Rebia in a make-shift "assembly" premises in a community hall.
Khandu reiterated that Arunachal Pradesh is an integral part of India and people of the state would never give up their territorial rights.
The militants probably tergetted a few army vehicles parked there but the grenade hit an auto rickshaw coming from the opposite direction.
Sources said the Indian troops resolutely confronted the Chinese PLA soldiers.
A senior Indian Forest Service official from Pune in Maharashtra, who was abducted by suspected insurgents two days ago near a forest area in Arunachal Pradesh's West Kameng district, is yet to be traced.
The advanced light helicopter, carrying Army personnel, was on regular sorties, he said. The incident took place at 10.43 am, and search operation is underway, the official said.