The issue came up during Modi's meeting here with Xi, their first since China allowed the UN Security Council to declare Pakistan-based chief of Jaish-e-Mohammad (JeM) terror outfit Masood Azhar as an international terrorist on May 1, by lifting its 'technical hold' which had been blocking the move for around 10 years.
The Prime Minister told the Chinese President that India has a consistent policy that all issues between India and China should be discussed through a bilateral mechanism, Foreign Secretary Vijay Gokhale told media persons after the meeting on the sidelines of the Shanghai Cooperation Organisation (SCO) Summit.
"There was a brief discussion," Gokhale said when asked whether Pakistan and terrorism emanating from there figured in the talks between Modi and Xi.
"We look for a peaceful settlement (with Pakistan) through negotiations," Gokhale quoted Modi as telling Xi.
The Prime Minister told Xi that he had made efforts to build cordial relations with Pakistan but those were "derailed", the Foreign Secretary said.
"The Prime Minister did inform President XI that Pakistan needs to create an atmosphere free of terrorism and that at this stage we do not see it happening as yet," Gokhale said.
"Therefore, we expect Pakistan to take concrete action on the issues that India has proposed, the areas of concerns that we have flagged to Pakistan.And Pakistan should take concrete action in this regard," the Foreign Secretary quoted Modi as telling Xi.
India has maintained that that it cannot have talks with Pakistan until terrorism emanating from that soil comes to an end.
The clear message given by Modi to Xi assumes significance against the backdrop of the consistent efforts made by China, which considers itself as "all-weather friend" of Pakistan, to stall an international attempt to proscribe Masood Azhar by the UN Security Council till recently.
China, one of the five permanent members of the UN Security Council, finally relented to allow the world body to sanction Azhar on May 1.
China relented under intense international pressure, particularly built by the US and France, in the aftermath of the ghastly terror attack by JeM on a CRPF convoy in Kashmir's Pulwama district on February 14, in which 40 personnel were killed.
India retaliated by carrying out air strike at a JeM terror camp in Balakot in Pakistan on February 26, after which military tensions escalated for some time.
( With inputs from IANS )