At the restricted session of the Shanghai Cooperation Summit in the Chinese city of Qingdao, while referring to situation in Afghanistan, Modi talked about challenge of terrorism and its effects.
He said the worsening situation in Afghanistan was "an unfortunate example" of terrorism.
India and Afghanistan accuse Pakistan of plotting terror attacks in their countries.
"All parties in the region should respect the sentiment with which (Afghan) President Ghani has taken courageous steps for peace," Modi said.
He said it was "our common responsibility to ensure that reasons that threaten Afghanistan's sovereignty and security are not repeated".
Modi also talked about connectivity projects and said India was all for such programmes provided they respect the country's sovereignty and territorial integrity.
Earlier in the day, amid frosty bilateral relationship, Modi and Pakistani President Mamnoon Hussain exchanged pleasantries after a press conference by the leaders of the Shanghai Cooperation Organisation.
The two leaders shook hands and exchanged pleasantries at the end of the media briefing which was addressed by Chinese President Xi Jinping. China is the host and chair of the SCO.
Modi and Hussain were among the leaders who attended the media briefing after culmination of the 18th SCO summit where India and Pakistan participated as full-fledged members.
The relations between India and Pakistan had strained after an attack on an army camp in Uri in Jammu and Kashmir by Pakistan-based terror organisations in 2016. The ties took a severe hit post-sentencing of Indian national Kulbhushan Jadhav by a military court in April last year.
India had also boycotted the 19th SAARC Summit after the Uri attack. The summit was called off after Bangladesh, Bhutan and Afghanistan also declined to participate in the Islamabad meet.
The Line of Control in Jammu and Kashmir has also witnessed escalation of hostilities.
(With input from agencies)