Indian Prime Minister Narendra Modi has called for a close partnership with Australia based on shared values to exploit the Indo-Pacific region's immense economic opportunities while tackling its growing security challenges.

Using soaring language that emphasised the common values of democracy and the rule of law, the leader of the world's second-most populous country sought to recast the relationship away from one that he acknowledged had been lacklustre in the past.

"There was a time when for many of us, Australia was a distant land at the southern edge of the world. Today, the world sees Australia to be at the heart of the Asia-Pacific and Indian Ocean region," he told the federal Parliament.

"This dynamic region holds the key to this world's future and Australia is at its crossroad.

"Australia has become more engaged in this part of the world. We welcome its growing role in driving this region's prosperity and shaping its security, because we in India seek the same future for this world. We also see Australia as a vital partner in India's quest for progress and prosperity."

Mr Modi's visit – the first to Australia by a serving Indian leader for 28 years – came as Australia prepares to start selling uranium to the emerging giant and plans for closer security co-operation including more joint military exercises. His speech came just a day after Chinese leader Xi Jinping addressed the Parliament and signed a free trade agreement with the Abbott government that will deepen Australia's already deep economic links to China.

Mr Modi, the leader of 1.2 billion people, said his country and Australia had "deeply linked destinies".

In remarks that starkly differentiate India from China, Mr Modi stressed that "I consider nations such as ours to be blessed because democracy offers the best opportunity for the human spirit to flourish".

"We have the freedom to choose, the right to speak and the power to remove," he said.

Interrupted frequently by applause, Mr Modi said India's rapid economic growth was a huge economic opportunity for Australia. He said his huge and youthful nation was "eager for change and willing to work for it".

"Working as partners and investors, Australia has immense opportunities to participate in India's progress. In turn, India will be the answer to your search for new economic opportunities and your desires to diversity your global economic engagement."

Stressing that there could, however, be no prosperity without security, Mr Modi said India and Australia should work more closely together on ensuring maritime security to allow safeguard trade, as well as co-operating more closely on combating terrorism.

"We can only pursue our dreams if we have the confidence that our cities are safe, our nations are secure, our region is stable and our world is peaceful," he said.

"This vast region has many unsettled questions and new challenges."

In an apparent reference to China's territorial disputes with neighbours and its rapidly-growing naval power, he added: "Historical differences persist despite growing interdependence. The oceans are our lifelines but we worry about access and security in our part of the world more than ever before."

He said countries large and small should "abide by international law and norms" even when locked in bitter disputes.

Other powers in the region should not allow such disputes to shatter maritime security and interrupt trade and economic integration, he said.

"India and Australia can play their part in it by expanding our security co-operation and depending on our international partnerships in the region."

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