"We also discussed the situation in West Asia and wider region. It is India's hope that peace, dialogue and restraint will prevail," Prime Minister Modi said after holding wide- ranging talks with his Israeli counterpart on the second day of his landmark visit.
Later, a joint statement issued by the two sides said the two Prime Ministers discussed the developments pertaining to the Israeli-Palestinian peace process.
The two leaders "reaffirmed their support for an early negotiated solution between the sides based on mutual recognition and security arrangements," it added.
Ahead of his visit, Modi, who is the first Indian prime minister to visit the Jewish state, had said that India believes in a two-state solution in which both Israel and a future Palestinian state coexist peacefully.
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India supports all efforts to find an acceptable solution to all the pending issues, including Jerusalem, he had said.
"A final-status agreement should respect the sentiments and address demands of all affected parties," Modi had said.
During his historic three-day visit, Modi did not travel to Ramallah, the seat of the Palestinian Authority, to meet with Palestinian leaders, as is common for visiting foreign dignitaries.
The move is seen as a significant departure from the past when Indian leaders always visited Palestinian territories while visiting Israel.
Modi, however, had met Palestinian Authority President Mahmoud Abbas in New Delhi in May.
India for the first time has de-linked its relationship with Israel from its traditional support to Palestine. It hopes to leverage its relationship with Israel to attract more investment, and gain from Israeli cutting-edge technology and defence.