The 24th Commonwealth Heads of Government Meeting (CHOGM), held every two years, is largely focusing on ways to counter extremism and terrorism besides exploring steps to deal with climate change.
External Affairs Minister Sushma Swaraj is representing India at the three-day Summit which was inaugurated by Queen Elizabeth II, amid heightened security in the wake of Paris terror attacks.
"The Commonwealth has a vital role to play in broadening international efforts to counter extremism. Its civil society and education networks make it particularly well placed to complement international efforts to build counter narratives to this poisonous extremist ideology," Cameron said.
Calling for concerted global efforts to deal with the challenge, he said: "The Commonwealth is this extraordinary organisation, a third of humanity, countries stretching the globe, half of it under the age of 25.
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"So, I think one of the most important things we can do here is talk about the perils of Islamist extremism violence and the problem of extremism more broadly."
Cameron pledged one million pound annually for five years to help set up the new counter-extremism unit and said a further 200,000 pound will be provided for expanding a European counter-radicalisation youth programme to include the Commonwealth.
The summit is also likely to deliberate on issues relating to trade and commerce and migration among others.
The Commonwealth countries are home to around 2.2 billion people of which over 60 per cent are under the age of 30. The grouping includes some of the world's largest, smallest, richest and poorest countries. Thirty-one of its members are small states, many of them island nations.
In her opening address, the Queen Elizabeth touched on a host of issues including the challenges of climate change and said young people should be involved in the fight.