The verdict handed Modi, 63, a powerful mandate to revive India's stagnant economy and implement a more assertive foreign policy after 10 years of left-leaning Congress party rule.
Modi invited his Pakistani counterpart Nawaz Sharif to Monday's ceremony in a first bold step aimed at mending strained ties between the neighbours.
Sharif, who has hailed Modi's "impressive victory", accepted the invite, which was extended to all heads of government from the South Asian Association for Regional Cooperation (SAARC) which includes Pakistan.
"Great having leaders from SAARC nations & Mauritius join us during the ceremony. Their presence will make the occasion more memorable," Modi said on Twitter on Sunday.
Modi, the son of a tea-stall owner, secured the biggest majority in 30 years at the election, trouncing the Congress on a promise of reviving manufacturing and investment to create millions of jobs.
Local media reports said that Modi had indicated that he would have smaller government than the outgoing one.
In a statement and messages on Twitter issued late on Sunday night, Modi indicated "unprecedented" changes in ministry formation, with "the top layers downsized".
"Focus is on convergence in the activities of various ministries where one cabinet minister will be heading a cluster of ministries working in complimentary sectors," the statement said, arguing that it was necessary for Modi's dictum of Minimum Government and Maximum Governance.
"Mr Modi is eventually aiming at smart governance where the top layers of government will be downsized and there would be expansion at the grass-root level," the statement issued from Gujarat Bhawan said, while also providing an official account of deliberations over the last few days on government formation.
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