"There's one country in our neighbourhood whose competitive advantage rests solely in producing and exporting terrorism," he said in his address at the East Asia Summit, without naming Pakistan.
"The time has come for us to stop this global exporter of terror," Modi said.
Earlier, while addressing the 14th ASEAN-India Summit here, Modi expressed deep concern at the rising "export of terror", in an apparent reference to Pakistan, saying it is a common security threat to the region.
The Prime Minister also noted that growing radicalism through the ideology of hatred and spread of extreme violence are the other security threats.
"Export of terror, growing radicalisation and spread of extreme violence are common security threats to our societies," he said in his attack on Pakistan amid escalating war of words between New Delhi and Islamabad.
Speaking at the East Asia Summit with US President Barack Obama and Chinese Premier Li Keqiang in attendance, Modi said, "This (terrorism) export is reducing space for peace and increasing space for violence and putting at risk peace and prosperity of all."
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"The time has come to isolate and sanction this instigator," Modi said.
The Prime Minister's fresh jibes directed at Pakistan came three days after he launched a sharp attack on Pakistan, saying that "one single nation" in South Asia is spreading the "agents of terror". He had told the G20 leaders in Hangzhou on Monday that those who sponsor the menace must be sanctioned and isolated, not rewarded.
In his address at the EAS, Modi said, "We need to target not only the terrorists but also their entire supporting ecosystem. And our strongest action should be reserved for those state actors who employ terrorism as an instrument of State policy."
Modi warned that terrorism is the most serious challenge to open and pluralistic societies and underlined that combating the menace requires collective effort.
He said India and most countries in South Asia were pursuing a peaceful path to economic prosperity, but singled out "one" neighbouring country.
"Competing geo-politics, traditional and non-traditional challenges threaten peace, stability and prosperity of region," he said at the summit.
He expressed hope that ASEAN will continue to lead and remain central to efforts aimed at greater regional integration and cooperation.
In his remarks at ASEAN-India Summit, the Prime Minister also said that ASEAN is central to India's Act East policy.
"Our engagement driven by common priorities bringing peace, stability and prosperity to the region," he told the 10-member grouping attended by Heads of state.