The meeting took place on the sidelines of the annual Shanghai Cooperation Organisation (SCO) Summit here which will explore concrete ways to bolster cooperation in the fight against terrorism, extremism and radicalisation besides deliberating on pressing global issues.
Modi and Xi are expected to explore ways to deepen ties in areas of trade and investment besides reviewing the overall bilateral cooperation.
The meeting is taking place weeks after the two leaders held an informal summit in the central Chinese city of Wuhan during which they exchanged views on solidifying the relationship between the two Asian powers.
Modi and Xi are likely to take stock of progress in implementation of decisions they had taken at the Wuhan informal summit, official sources said.
Modi is expected to hold nearly half a dozen bilateral meetings with leaders of other SCO countries.
It is for the first time the Indian prime minister will be attending the SCO Summit after India along with Pakistan became a full-fledged members of the grouping, which has been increasingly seen as a counter to NATO.
The SCO was founded at a summit in Shanghai in 2001 by the presidents of Russia, China, Kyrgyz Republic, Kazakhstan, Tajikistan and Uzbekistan.