Modi engaged in landmark talks with Nawaz Sharif just a day after his inauguration, the first such high-level talks in New Delhi since the 2008 terror attacks on Mumbai that severely strained ties with Pakistan.
Their encounter (pictured) prompted cautious optimism of improved ties after India's change of leadership.
"I had a good and constructive meetign with Prime Minister Modi this afternoon. It was held in a warm and cordial atmosphere. We agreed that our meeting in New Delhi should be a historic opportunity for both countries," Sharif told reporters after the meeting on Tuesday. "The one-and-a-half billion people of the two countries want us to focus on their wellbeing and their welfare."
Sharif was one of six regional leaders, also including Afghan President Hamid Karzai, who attended Modi's inauguration in New Delhi on Monday.
Hindu nationalist Modi's Bharatiya Janata Party (BJP) won India's general elections by the largest margin in 30 years, in a vote where the long-dominant Indian National Congress logged its worst ever results.
Critics of Modi had said that his election might have a negative impact on already difficult relations with Pakistan. When Modi was governor of his home state of Gujarat in western India in 2002, anti-Muslim riots claimed at least 790 lives, with some estimates suggesting 2,000 were killed. Modi faced a travel ban and other western sanctions for a decade as a result.
Yet the new prime minister's decision to invite Sharif for the inauguration and Tuesday's talks caught critics off guard; Modi also utilized the social media site Twitter to write about his personal discussion with Sharif on the sidelines of Monday's lavish ceremony.
India's new leader on Monday announced a new, streamlined cabinet. His team of 46 is reduced from 71 in the previous cabinet.
The BJP leader said he wanted to make India's government more efficient and able to respond quickly. According to domestic news reports, Modi was likely to chair his first formal cabinet meeting on Tuesday evening.
India's mammoth general elections attracted a record turnout of 66.38 percent, with the BJP winning 272 of 543 available seats in parliament.
This was the first time in 30 years that any single Indian party managed to win an outright parliamentary majority.
msh/ipj (AFP, AP, Reuters)