For the first time in India's history, a clutch of South Asian leaders will be among the guests watching Modi's inauguration at the presidential palace in New Delhi – including the Prime Minister of arch-rival Pakistan, Nawaz Sharif. (Agencies)
Modi's Hindu nationalist Bharatiya Janata Party (BJP) and its allies swept India's elections this month, ousting the Nehru-Gandhi dynasty in a seismic political shift that has given his party a mandate for sweeping economic reform.
His day began with a visit to the site of independence hero Mahatma Gandhi's cremation on the banks of the Yamuna River.
Sharif and Afghan President Hamid Karzai reached Delhi in the morning, with the ceremony due to begin at 1800 (1230 GMT).
Even before his inauguration, Modi made waves on the global stage, where once he was treated by many with suspicion - and by some as a pariah - for a rash of Hindu-Muslim violence that erupted 12 years ago in Gujarat, the western state he ruled.
Modi, 63, has spoken with the presidents of the United States and Russia, and he has become one of only three people that Japanese Prime Minister Shinzo Abe follows on Twitter.
The U.S. administration denied Modi a visa in 2005, but President Barack Obama has now invited him to the White House.
The low-caste son of a tea stall-owner, Modi has given India its first parliamentary majority after 25 years of coalition governments, which means he has ample room to advance reforms that started 23 years ago but have stalled in recent years.
Many supporters see him as India's answer to the neo-liberal former U.S. President Ronald Reagan or British leader Margaret Thatcher.
One foreign editor has ventured Modi could be so transformative he turns out to be "India's Deng Xiaoping", the leader who set China on its path of spectacular economic growth.
Modi kicked things off on Sunday with an announcement that he would streamline the Cabinet, a move to a more centralized system of governing aimed at breaking decision-making bottlenecks widely blamed for dragging down economic growth.
Modi said he would appoint super ministers in charge of several departments to make ministries coordinate better.
Arun Jaitley, 61, is the frontrunner to be named finance minister, party sources said. One of the top corporate lawyers in the country and a close Modi aide, Jaitley served in a previous BJP administration as the Commerce Minister.
The BJP has long advocated a tough stance on neighbor Pakistan with which India has fought three wars since independence from Britain separated them in 1947, and Modi has been seen as a hardliner on issues of national security.
In that respect, Modi's decision to invite Sharif for his inauguration and bilateral talks came as a surprise and raised hopes for a thaw in relations between the nuclear-armed rivals, particularly frosty since 2008 attacks on the city of Mumbai by Pakistan-based militants.
"Modi has already displayed his political dexterity and diplomatic skills in inviting Nawaz Sharif, among other leaders, to his swearing in," wrote columnist Prashant Jha in the Hindustan Times.
"But will he be able to stay the course? What happens after the first terror attack?"
Vikram Sood, former head of India's external intelligence agency, the Research and Analysis Wing, told Reuters that inviting all the leaders of the South Asian Association for Regional Cooperation (SAARC) was "an astute" diplomatic gesture.
"This augurs well for the region, and an improvement of relations all over the region is possible if these moves are followed by other steps, bilaterally and multilaterally," he said.
For the first time in India's history, a clutch of South Asian leaders will be among the guests watching Modi's inauguration at the presidential palace in New Delhi – including the Prime Minister of arch-rival Pakistan, Nawaz Sharif.