Paying tributes to Jamsetji Nusserwanji Tata, Modi said "those who create history, without seeking or holding power, are truly great".
He also praised Jamsetji for his vision of environment friendly energy and initiatives for welfare of the people associated with the Tata Group.
The culture of businessmen donating massive amounts in charity was new to the Western world, but Jamsetji Tata had done the same long ago, the Prime Minister added.
Jamsetji is the first industrialist felicitated by the Indian government in such a manner.
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Jamsetji Tata founded the Tata group in 1868. He worked for building India that would be an industrial power. The translation of his vision led to creation of India's first integrated steel plant (Tata Steel's Jamshedpur plant - 1907), hydroelectric power plants that service Mumbai's needs till today (Tata Power's Khopoli plant - 1910), and the Indian Institute of Science (1909).
The government had earlier honoured Jamsetji by releasing postal stamps - one in 1958 and another in 1965.
He said the two great men - one an ascetic and the other an industrialist - shared the same wavelength and had a common vision for a self-reliant India.
Speaking on the occasion, Chairman of Tata Sons Cyrus P Mistry said Jamsetji's focus was two-pronged, each equally important and interconnected.
"The first was the industrialisation of the country and building the requisite human capital. The second was conducting business in a fashion that positively impacted the quality of lives of the people it touched," he said.