India and Germany have struck a deal to promote clean energy as part of an overall strategy to make it easier to do business.
Germany is to provide more than $2.24bn in aid for solar power projects and green energy corridors - high-efficiency power grids - as part of a push for sustainable development.
The assistance, part of a raft of 18 agreements signed in New Delhi, dovetails with efforts to bind India into a global debate that will culminate in the COP21 climate change summit in December.
"We look forward to a concrete outcome at COP21 in Paris that strengthens the commitment and the ability of the world, especially of poor and vulnerable countries, to transition to a more sustainable growth path," Modi told reporters.
India, the world's third-largest emitter of greenhouse gases, was the last major country to submit its energy strategy ahead of the U.N. climate conference.
India's energy plan seeks to boost energy efficiency but makes no commitment to reduce emissions of greenhouse gases - reflecting its view that richer nations bear most responsibility for global warming.
Responding, Merkel said: "We have understood, Prime Minister, that climate protection needs to be embraced by the people - who also have to reap a benefit."
India and Germany also signed an agreement to fast-track business approvals, providing German firms with a single point of contact to help them navigate a web of red tape that often thwarts initiative.