Prime Minister Modi was accorded a ceremonial welcome with military honours at the Chancellery, the office of the German Chancellor, where he was greeted by Ms Merkel and senior German officials.
He then introduced the Chancellor to his accompanying Indian ministerial delegation.
Mr Modi received a guard of honour and was welcomed as the the music choir of the German Army played the Indian National Anthem.
The two leaders then headed inside for the IGC Plenary session, the focal point of Mr Modi's two-day visit to Germany.
Prime Minister Narendra Modi was holding formal talks with German Chancellor Angela Merkel as part of the IGC -- held every two years -- where he was joined by his delegation of senior ministers, including Minister for Science and Technology Harsh Vardhan, Commerce Minister Nirmala Sitharaman, Energy Minister Piyush Goyal and Minister of State for External Affairs M J Akbar.
The last IGC was held in New Delhi in October, 2015, when bilateral ties were significantly scaled up.
At the IGC in Berlin, the two leaders were expected to clinch a host of agreements and sign MoUs to enhance the strategic partnership between the two countries.
"We will chart out a future roadmap of cooperation with focus on trade and investment, security and counter-terrorism, innovation and science and technology, skill development, urban infrastructure, railways and civil aviation, clean energy, development cooperation, health and alternative medicine," the prime minister had said in a Facebook post before he left for Berlin yesterday.
Germany is the largest trade partner for India in the European Union (EU) and one of the leading sources of foreign direct investment (FDI) into the country.
There are more than 1,600 German companies and 600 German joint ventures in India and the German economic profile supports excellence and expertise that match with India's development priorities of Make in India, Clean India, Skill India, Digital India, Smart Cities, the Ministry of External Affairs said.