Indian Prime Minister Narendra Modi met his Pakistani counterpart Nawaz Sharif for landmark talks in New Delhi on Tuesday in a bid to ease tensions between the nuclear-armed neighbours.

The leaders shook hands and smiled for the media on the steps of a former palace used by the government for receptions in the capital, before heading inside for talks on Modi's first full day in government.

It is the first time an Indian prime minister has hosted a Pakistani leader for official discussions in Delhi since the rupture in relations that followed the 2008 attacks in Mumbai, when 166 people were killed.

Sharif was one of six regional leaders who attended a lavish inauguration on Monday night for Hindu nationalist Modi, who has been elected leader of the world's largest democracy with the strongest mandate for 30 years.

Modi has an image as a hardliner, even within his own Hindu nationalist party, and is regarded with deep suspicion by many in Pakistan after deadly anti-Muslim riots erupted in his western state of Gujarat a decade ago.

But in a surprise move that disarmed many of his critics, Modi decided last week to invite Sharif to his inauguration, in what was seen as a significant olive branch to India's Muslim neighbour.

The South Asian neighbours have fought three wars since independence in 1947, and remain bitterly divided over the disputed region of Kashmir.