"There's one country in our neighbourhood whose competitive advantage rests solely in producing and exporting terrorism," he said in his address at the East Asia Summit, without naming Pakistan.
"The time has come for us to stop this global exporter of terror," Modi said.
Earlier, while addressing the 14th ASEAN-India Summit here, Modi expressed deep concern at the rising "export of terror", in an apparent reference to Pakistan, saying it is a common security threat to the region.
"Export of terror, growing radicalisation and spread of extreme violence are common security threats to our societies," he said in his attack on Pakistan amid escalating war of words between New Delhi and Islamabad.
Speaking at the East Asia Summit with US President Barack Obama and Chinese Premier Li Keqiang in attendance, Modi said, "This (terrorism) export is reducing space for peace and increasing space for violence and putting at risk peace and prosperity of all."
"The time has come to isolate and sanction this instigator," Modi said.
In his address at the EAS, Modi said, "We need to target not only the terrorists but also their entire supporting ecosystem. And our strongest action should be reserved for those state actors who employ terrorism as an instrument of State policy."
Modi warned that terrorism is the most serious challenge to open and pluralistic societies and underlined that combating the menace requires collective effort.
"Competing geo-politics, traditional and non-traditional challenges threaten peace, stability and prosperity of region," he said at the summit.
He expressed hope that ASEAN will continue to lead and remain central to efforts aimed at greater regional integration and cooperation.
In his remarks at ASEAN-India Summit, the Prime Minister also said that ASEAN is central to India's Act East policy.
"Remain committed, including through membership of export
control regimes and to pursuing total and verifiable elimination of weapons of mass destruction," Modi said.
"This underlines commonalities in approaches," Modi said.
He also said India is committed to supporting realisation of Regional Comprehensive Economic Partnership (RCEP). India can also play an important role in Asia-Pacific Economic Cooperation for deepening ongoing economic integration in the region.
Modi said he was "happy to convey that Nalanda University has been inscribed as UNESCO World Heritage site in July 2016".
India will remain steadfast in shared pursuit of regional, strategic, political and economic priorities within the EAS framework, he said.
The EAS, held annually by leaders of, initially, 16 countries in the East Asian, Southeast Asian and South Asian regions, had its membership expanded to 18 nations including the US and Russia at the sixth EAS in 2011.
EAS is held after annual ASEAN leaders' meetings. The first summit was held in Kuala Lumpur, Malaysia on 14 December, 2005.
In his remarks at the ASEAN-India summit, he said, "The threat is local, regional, and transitional at the same time. Our partnership with ASEAN seeks to craft a response through coordination, cooperation at multiple levels."
"We are willing to take concrete steps to enhance cooperation in cyber security, de-radicalisation and counterterrorism," Modi said.
He said enhancing connectivity was central to India's partnership with ASEAN.
