President Rouhani and PM Modi will be holding bilateral talks on several issues including the crucial Chabahar Port which India is helping Iran to develop on the Gulf of Oman for trade with Afghanistan and Central Asia.
India is understood to invest $ 85 million for equipping Chabahar Port in South-East Iran.
PM Modi will be hosting lunch for President Rouhani on Saturday while President Kovind will host a banquet for him.
India has also expressed interest in the Farzad-B gas field, and sources told PTI that there were commercial discussions on to find a "win-win" solution while Iran said it is ready to simplify visa procedures and hoped India will reciprocate to facilitate easy movement of people between the two countries.
President Rouhani began his three-day India visit after his arrival in Hyderabad on Thursday evening where he said Iran has a plan for the fraternity for India. He will also deliver a speech at the Observer Research Foundation later in the day.