"Our thoughts and prayers are with the families of the victims of forest fire, deepest condolences," Prime Minister Modi said in his joint address to media after holding talks with Costa.
Raging forest fires in Portugal last week killed at least 64 people, most of whom burnt to death in their cars, in one of the worst such disasters in recent history.
The fire broke out in the municipality of Pedrogao Grande in central Portugal, before spreading fast across several fronts.
"Sad to learn of tragic loss of lives in the forest fire in Portugal. Deepest condolences to the Portugese people on this tragedy (sic)," he had tweeted.
Modi who arrived here on the first leg of his three- nation tour held talks with Costa and discussed ways to further intensify bilateral relations.