Modi sworn in as PM, promising a "strong and inclusive" India

The 63-year-old Hindu nationalist broke with tradition and invited his Pakistani counterpart Nawaz Sharif to the ceremony. Sharif hailed a "great moment and a great opportunity" for peace in the region.

The pro-business leader was also expected to reveal a sharply reduced government of 45 members, a cut of 26 from that of his predecessor Manmohan Singh, to try to speed up decision-making and slash India's notorious bureaucracy.

"Together we will script a glorious future for India," Modi said in a statement posted on the website of the prime minister shortly after he took the oath in front of President Pranab Mukherjee.

"Let us together dream of a strong, developed and inclusive India that actively engages with the global community to strengthen the cause of world peace and development," the statement said.

Ten days after his Bharatiya Janata Party (BJP) won the first parliamentary majority since 1984, Modi entered office riding a wave of public support that has obscured his past as a controversial politician tainted by religious violence.

The former teaboy has risen through the ranks of right-wing Hindu organisations and was boycotted by Western nations for a decade over anti-Muslim riots that occurred while he was running his home state of Gujarat in western India in 2002.

He said in his statement that he was elected with "a mandate for development, good governance and stability" -- avoiding any reference to the Hindu nationalist plank of his party's election manifesto.

Senior members in his government are Arun Jaitley, tipped as finance minister, Sushma Swaraj, likely to be foreign minister, and Rajnath Singh, who is lined up for the home portfolio.

Figures such as Uma Bharti, a hardliner once expelled from the BJP after accusing the party of abandoning core Hindu concerns, indicated that the religious right would retain some influence.

As stocks markets rose at the prospect of a pro-business leader taking the helm of the world's largest democracy, the prime minister of India's nuclear-armed rival gave voice to a widespread sense of optimism.

"This is a chance to reach out to each other. Both governments have a strong mandate," Pakistan premier Sharif told India's NDTV network, according to a transcript provided by the Pakistan High Commission.

"Both countries should rid the region of instability and security that has plagued us for decades," he said.

He promised to pick up the threads of a failed peace process which went on during his second term in office -- which coincided with the last BJP government in India.

In 1999, then-Indian prime minister Atal Bihari Vajpayee rode a bus to the Pakistani city of Lahore to sign an accord with Sharif, but three months later the neighbours nearly went to war over the disputed Himalayan territory of Kashmir.

Sharif sat among other leaders from South Asia invited for the ceremony at the vast colonial-era presidency building, where thousands of dignitaries sweltered in the mid-summer heat during the oath-taking.

'Right turn'

After a decade of left-leaning Congress party rule, the 63-year-old Modi is expected to move India firmly to the right in the next five years with a mantra of "Minimum Government, Maximum Governance".

The BJP secured the first majority since 1984 at the election, trouncing the scandal-plagued Congress on a promise of reviving manufacturing and investment to create millions of jobs.

Modi's pledge to overhaul the flagging economy won over voters, along with his rags-to-riches story and reputation as a clean and efficient chief minister of prosperous Gujarat state.

"The country needs to be steered in the right direction now and only Modi can do it. He's got a strict school headmaster quality about him," Kavita Lal, a 32-year-old IT professional, told AFP.

Like many, she mocked the prime ministership of the 81-year-old Singh who rarely spoke to the media and was widely seen as lacking authority.

"It just seemed like for the last 10 years we had no leader in the country," she said.

Since election results on May 16, Modi has been at pains to put his divisive past behind him, appearing statesmanlike and generous even to political opponents.

In a rare sign of emotion last week, he choked back tears as he promised to try to live up to the expectations of all Indians including "our weakest and poorest" during a speech in parliament.

The invitation to Sharif was seen as a significant olive branch to India's Muslim neighbour and marked the first time that a leader from either country had attended his counterpart's inauguration since independence in 1947.