The two leaders met at an unprecedented informal summit in China, the first since a clash between the two countries last summer when China attempted to extend a road through Doklam and was met with resistance from Indian forces.
Between 2014 and the Doklam incident, the two leaders met about a dozen times in more formal settings. No agreements will be signed or joint statements issued after this meeting, known as the "heart-to-heart" informal summit.
Modi said such the "heart-to-heart" summit should become a tradition for the two countries.
"Very positive environment [has been] created through the informal summit and you have personally contributed to it in a big way. It's a sign of your affection for India that you have hosted me twice in China outside Beijing," Modi told Xi.
Modi said India and China, which contain 40 percent of the world's population, have a vast responsibility.
Xi talked about how the two countries have established a close partnership and made positive progress.
"In the past five years, we have achieved a lot," Xi said. "India and China have a combined population of 2.6 billion, which provides enormous potential for development. The influence of our two countries is steadily rising in the region and the world."
Raveesh Kumar, India's Ministry of External Affairs spokesperson, tweeted about the summit, saying the Chinese president was warmly welcomed upon his arrival at Hubei Provincial Museum in Wuhan.
"The two leaders had a one-on-one meeting during which they exchanged views on solidifying our bilateral relationship," Kumar tweeted.
The two leaders will continue their one-on-one meeting Saturday with lakeside walks, a boat ride and lunch, according official sources in Wuhan.