The development was seen as a major boost to the Indian-American ties. [How PM Modi struck a chord with youth in US]
Obama will hence become the first US President to be the Guest of Honour on January 26.
The Indian prime minister spoke about his invitation to Obama on micro-blogging site Twitter. "This Republic Day, we hope to have a friend over...invited President Obama to be the 1st US President to grace the occasion as Chief Guest," he posted.
This Republic Day, we hope to have a friend over…invited President Obama to be the 1st US President to grace the occasion as Chief Guest.— Narendra Modi (@narendramodi) November 21, 2014
Obama's acceptance of the invitation is considered Washington's efforts to forge a new partnership with India.
Earlier in the day, a top official in Obama's administration called PM Modi's visit to the USA in September "extraordinarily successful" and said the bilateral relation between the two big democracies has come a long way.
Obama's January visit will be his second to India in 2010
Modi's invitation to Obama came just weeks after their meetings in the USA and more recently, on the sidelines of the G20 Summit in Brisbane. The US President called Modi a "man of action" on that occasion.
The January visit will be Obama's second to India. In 2010, he came to India at the invitation of the then prime minister, Manmohan Singh, and addressed a joint session of the Parliament.