"Had a telephone conversation with PM @TonyAbbottMHR on the hostage crisis in Sydney," Modi said in a tweet.
Modi also condoled the loss of lives in the incident to the victim's families.
"Two innocent people lost their lives in the hostage crisis. My deepest condolences to their families," he said.
Many people, including two Indians, were taken hostage at a popular cafe in Sydney in Australia by a gunman Monday. The crisis ended with the police storming the cafe and killing the gunman.
Swiss chocolate-maker Lindt, the owner of the Sydney cafe at the centre of a day-long siege that ended in the deaths of the gunman and two of his hostages, said it was "devastated" by the outcome of the standoff.
"We are devastated by the loss of their lives and that several others were wounded and had to experience such trauma," Lindt said in a statement.
Iranian-born hostage-taker Man Haron Monis, who was granted political asylum in Australia in 1996, was killed along with two of his 17 hostages when police dramatically stormed the Lindt chocolate cafe in the city's financial district to end the siege.