More than 30,000 people packed Melbourne's Marvel Stadium on Thursday to hear Mr Modi, who told the crowd the spirit of India was alive in Australia.
''The Indianness within you has always endured and been kept alive,'' he said.
Mr Modi pointed to community markets across Melbourne and Australia being alive with the colour and spirit of India.
"We Indians are like that - just as when sugar is added to milk, it makes the milk much sweeter," he said.
"The milk is bought from Australia, however the tea is made the Indian way."
Foreign Minister Penny Wong said ties between Australia and India were critical for peace in the broader region.
"India is such an important power in the world, and our relationship with them matters to stability in the Indo-Pacific. But it certainly was a big party last night," she told Nine's Today program on Friday.
"This really capped what has been a landmark week in Australian foreign policy."
Earlier in the week, Fiji and Australia signed a security alliance during a whistlestop visit to the Pacific region by Prime Minister Anthony Albanese designed to counter China's growing influence, while Canberra also agreed to continue talks with the Solomon Islands for a comprehensive treaty.
Mr Albanese joined the event in Melbourne on Thursday, welcoming Mr Modi as "a very dear friend".
Mr Albanese also thanked the largely Indian diaspora crowd, saying about one million Australians can trace their roots back to India.
"Australians of all backgrounds have been enriched by you bringing your culture here and adding it to our multicultural character," he said.
Mr Albanese told the crowd he spent six weeks backpacking in India in 1991 and experienced the generosity and warmth of its people.
"I learned there something very simple and clear … if you want to understand India, get on a train," he said..
Ranjai Raghu, who moved to Australia from India about 20 years ago, compared the atmosphere in the stadium to a cricket match, saying she felt opinions on Mr Modi among the diaspora were mostly positive.
''There's been a very big change in India and India's relationships with other countries during his term,'' she told AAP.
''We support that co-operation.''
The visit by Modi coincided with the two countries signing a deal for Australian uranium to be exported to India after a decade of delay, following concerns the fuel could be used for weapons.
Resources Minister Madeleine King said the uranium deal was significant.
"What is really important is is a it's immense relationship, but also it makes sure Australia and India maintain that connection through energy security, and that's exactly what we want to do," she told ABC Radio.
"What we what for Australia to be, and remain indeed, is a reliable partner in the energy security of our region, and India being part of that network."
Minerals Council of Australia chief executive Tania Constable said the deal represents an immense opportunity.
Ms Constable pointed to plans by India to expand its nuclear energy fleet, adding Australia would double is current uranium exports if it met just half of that demand.
Former Australian ambassador to India Barry O'Farrell said there had been a shift in recent years in the relationship between the two countries.
"COVID reminded India as well as other countries about the need to have resilient supply chains," he told ABC Radio.
"India took another look at Australia and realised that we have complementary economies. We don't compete other than on the cricket field."
Mr Modi is due to depart Australia on Friday following a tour of the Melbourne Cricket Ground, where he and Mr Albanese will meet Cricket Australia and AFL heads.
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