"We have always believed that it is not our task to interfere in what you do but to support you in the path you decide to take," he said while addressing Nepal's parliament, the first foreign leader to do so after the restoration of democracy in this South Asian nation.
In his speech, Modi appreciated the warm reception he was accorded after landing in Kathmandu earlier in the day on a two-day official visit.
"The respect that I have got is not for Narendra Modi or the prime minister of India. It is respect for the people of India," he said.
"Our relations with Nepal are as old as the Himalayas and the Ganga," he said.
"Not only people of Nepal but also those who believe in the power of democracy are looking at Nepal and this assembly."
He also hailed Nepal's constitution drafting process.
"A constitution is not merely a book. It integrates the past, present and the future," the Indian prime minister stated.
"A constitution always integrates, it never divides."
He appreciated all those in Nepal who gave up the path of war and joined the democratic process.
"There was Samrat Ashok. After war he looked towards Buddha. From yudh (war) he went to Buddh (wisdom)," he said, adding that India's only wish was that "Nepal's progress reached as high as the Himalayas".
"Being your neighbour and seeing our experience as a democracy, we feel happy at the direction in which you are going," he said.