Following an Oval Office meeting, Obama praised Modi for his energetic approach to addressing India's challenges since taking office in May. He singled out in particular the prime minister's focus on addressing "the needs of the poorest of the poor," as well as making India a source of peace and stability in the region.
Modi said the U.S. and India had a multitude of common economic priorities and pressed Obama to make it easier for Indian services companies to access American markets.
"We already have the foundation of a strong partnership," Modi said, according to the English translation of his remarks. "We now have to revive the momentum and ensure that we get the best out of it for our people and the world."
On the eve of Tuesday's talks, Obama hosted Modi for a private working dinner at the White House — despite the fact that Indian leader, a devout Hindu, was fasting.
Typically, visiting heads of state spend just a portion of a day at the White House meeting with the president and other U.S. leaders. The rare second day of attention from Obama underscored the White House's desire to give a warm welcome to a man once barred from even entering the U.S.
A military honour cordon lined the White House driveway as the black SUV carrying Modi drove up to the West Wing entrance. Crowds that had gathered outside the gates cheered as the vehicle began to make its way over from Blair House, the government guest house across from the White House, where Modi spent the night.
Following their Oval Office meeting, Obama and Modi travelled together to the Martin Luther King, Jr. memorial on the National Mall, just a few blocks from the White House.
Now the leader of the world's largest democracy, Modi was the top elected official in the Indian state of Gujarat more than a decade ago when religious riots there killed more than 1,000 Muslims. When Modi later requested a visa to visit the U.S., Washington said no. Modi has denied involvement in the violence.
Beyond the economy, Obama and Modi said they discussed shared intelligence on terrorism and regional concerns, including Afghanistan, where the U.S. is winding down its 13-year military involvement. Also on the agenda: clean energy, climate change, medical collaboration to fight diseases and scientific efforts to improve sanitation and hygiene throughout India.
While military ties and trade in military equipment between the two countries have grown, the economic relationship has been rockier, with Washington frustrated by India's failure to open its economy to more foreign investment and address intellectual property complaints. Challenges with an existing civil nuclear agreement and the arrest and strip search last year of an Indian diplomat have further frayed relations.
Before arriving in Washington, Modi received a rock-star reception at New York's Madison Square Garden, where thousands of Indian-Americans flocked for a rare chance to see the new leader. The dazzling Bollywood-style dancers and dozens of U.S. lawmakers who took part highlighted the popular support Modi is enjoying on his first official visit to the U.S. since being elected in May.
Associated Press writer Darlene Superville contributed to this report.