India and Spain signed seven wide-ranging agreements in the areas of renewable energy, cyber-security, civil aviation among others. PM Modi also credited Mr Rajoy for ushering in economic reforms in Spain.
Mr Modi, who is the first Indian Prime Minister to visit Spain in nearly three decades, met Mr Rajoy at his official residence Moncloa Palace. He also met Spanish King Felipe VI earlier during the day.
Ahead of talks with his Mr Rajoy in Madrid, Prime Minister Modi said that India was committed to take ties with Spain to "a new level". Addressing reporters at Moncloa Palace, he said that India was in favour of "more productive" ties with Spain.
"India is committed to take relations with Spain to a new level," he had said.
PM Modi is also expected to interact with Spanish business leaders and invite them to invest in India. There are around 200 Spanish companies operating in India. Spain is India's seventh-largest trading partner in the European Union.
PM Narendra Modi arrived in Madrid from Germany on Tuesday as part of the second leg of his ongoing six-day, four-nation tour of Europe, that also includes official visits to Russia and France.
(with inputs from IANS and PTI)