Modi, who wrapped up his two-day visit to the Himalayan country, assured Bhutan that all the commitments made by earlier governments would be implemented by his government.
He said that change in government will not alter the dynamics of Indo-Bhutan ties, as he vowed to further deepen the relationship through certain new proposals like organising joint sports events between Bhutan and India's northeastern states and setting up a Himalaya University for joint research.
Addressing a joint session of Bhutan's Parliament, Modi emphasised that the ties between the two countries were historic and the doors to their "hearts" were open to each other.
"Strong Bhutan will benefit India like a strong and prosperous India will be beneficial for the countries of the region, especially the SAARC members. India's prosperity is important as then it can help small countries and perform its duty of a good neighbour. But if India is weak and struggling with its own problems, then how can it help others," he said.
He said India was always conscious of its responsibility towards its neighbours and in this context referred to the invitation extended to SAARC leaders for his swearing in ceremony last month. "It added sheen to the event."
On Indo-Bhutan ties, he said, "Governments have changed but that has not affected the closely-knit ties," and quoted former Bhutan King to say that India and Bhutan were like "milk and water".
Modi electronically laid the foundation stone for 600 MW Kholongchu Hydro-electric project, a joint venture between India and Bhutan.
He also lauded Bhutan for the smooth transition from monarchy to democracy in a span of seven years which showed maturity in governance in that country.
63-year-old Modi arrived here yesterday on his first foreign trip after assuming office last month.
The fact that the Prime Minister chose Bhutan as his first foreign destination assumes significance since China has lately intensified efforts to woo it and establish full- fledged diplomatic ties with Thimphu.
In a joint statement, the two sides expressed satisfaction with the cooperation between them in the matter of mutual security.
They agreed to continue with their close coordination and cooperation with each other on issues relating to their national interests, and not allow each other's territory to be used for interests inimical to the other.
External Affairs Minister Sushma Swaraj, who accompanied Modi, told reporters that the Indian side was "extremely satisfied" with the "extremely successful" visit.
Noting that Modi believes in speedy implementation of works, she said the projects that have been pending for some time will be executed on fast-track basis by the NDA government.
She also said the commitments made by the earlier governments would be implemented "in toto", allaying apprehensions on this count.
Noting that terrorism divides and tourism unites, Modi told Bhutan's Parliament that the Himalayan nation has immense potential in the tourism sector.
Modi said development of tourism does not require large investment but can yield substantial profit and even the poor can benefit from it.
Describing the Himalayas as a shared legacy, he stressed on the need to develop the region and said India is planning to open a university for Himalayan studies.
He also thanked Bhutan's Prime Minister Tshering Tobgay for attending his swearing in ceremony in Delhi last month.
Modi had yesterday vowed to nurture bilateral relations which he described as "B4B Bharat for Bhutan and Bhutan for Bharat" as he held wide-ranging talks with Bhutan's King Jigme Khesar Namgyel Wangchuk and Tobgay.
He had also inaugurated the Supreme Court complex built by India as part of the developmental cooperation.
Besides Swaraj, Modi was accompanied by National Security Adviser Ajit Doval and Foreign Secretary Sujatha Singh.