A statement from the British High Commission said the meeting with Jaitley reaffirms Britain's defence and security partnership with India.
On a three-day visit to India, the secretary said there was "considerable scope" for Britain and India "to work together to tackle many of the biggest security challenges the global community faces. My discussions with Minister Jaitley aim to identify how best to do so".
He said Britain and India "have a long tradition of close partnership to promote global stability".
"My visit confirms our determination to strengthen and deepen that relationship still further," he added.
During his visit, Fallon will lead Britain's commemorations recognising India's sacrifice during the World War I.
On Thursday, he laid a wreath at the Amar Jawan Jyoti at India Gate, which has the names of nearly 13,300 servicemen, including some British soldiers and officers.
Over one million Indian soldiers fought in the World War I and around 70,000 lost their lives.
"At this time of remembrance, I am honoured to have the opportunity to pay tribute to those from both nations who sacrificed their lives for their countries in the First World War," he said.
Later in the day, Fallon will deliver a keynote speech before attending a commemoration event here hosted jointly by the British High Commissioner and the United Services Institute of India marking the contribution of Indian forces to World War I.
The World War I began July 28, 1914, and ended Nov 11, 1918. It involved the world's greatest powers, with nearly 70 million combatants. More than nine million lost their lives.
The British Empire entered the war Aug 4, 1914, and over 1.1 million Indian servicemen fought in the battles.