Along with the Heads of State Council (HSC) session, which is the SCO's supreme decision-making body, the leaders will hold a number of bilateral meetings on the summit's sidelines.
The SCO meeting comes after President Donald Trump controversially pulled Washington out of the 2015 worldwide pact with Iran that placed limits on its nuclear program in return for easing economic sanctions.
However, there is no official word on whether there will be any interaction between Modi and Pakistan President Mamnoon Hussain, who is scheduled to attend the meeting in China. Modi arrived here on Saturday afternoon for a two-day visit to attend the annual SCO Summit.
If Iran is admitted into the bloc it would be a strong show of support for the country after the USA withdrew from the multi-nation Iran nuclear accord.
Iran and Afghanistan are among four so-called "observer states" which are seeking full membership.
The Chinese President welcomed Pakistan's representation in the Organization as a member. Countries outside the SCO will be looking closely at what transpires at the summit.
The meeting took place ahead of the Shanghai Cooperation Organisation (SCO) summit and covered key aspects of the bilateral engagement, reflecting the resolve by the two countries to reset relations and bring back trust in their ties, hit by the Doklam standoff and several other thorny issues.
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The 2015 nuclear deal lifted that barrier.
"The SCO has a rich agenda for cooperation, ranging from fighting terrorism, separatism and extremism to promoting cooperation in connectivity, commerce, customs, law, health and agriculture; protecting the environment and mitigating disaster risk, and fostering people-to-people relations", Prime Minister Modi said.
Chinese President Xi Jinping has been seeking a bilateral meeting with Iranian President Hassan Rouhani, hoping to capitalize on Iranian estrangement from the G7 nations after U.S. President Donald Trump withdrew from the Iran nuclear deal. The leaders are also supposed to focus on the issues of global trade and counterterrorism.
The President said that China Pakistan Economic Corridor was an important part of Belt and Road Project.
Armored vans lined the streets of the coastal city of Qingdao as world leaders arrived Friday for the 18th annual summit of the Shanghai Cooperation Organization (SCO), a regional security bloc led by China and Russian Federation.
The summit will focus on enhancing cooperation to address the challenges of terrorism, drug trafficking, cross-border crimes, information security threats, Liao Jinrong, head of the global cooperation department with the Ministry of Public Security, said at a media briefing ahead of the summit, state-run Xinhua news agency reported.
Terrorism is the most severe security challenge the SCO faces. The presence of two Asian giants China and India gives the summit the heft that can translate into greater business ties in the region.