The opposition Hindu nationalist Bharatiya Janata Party (BJP) has called its predicted landslide win in India's election a "people's victory".
President Rajnath Singh said it marked "the start of a new era" for India.
Votes counted so far suggest the BJP is on course for the most resounding victory by any party for thirty years, trouncing India's Congress Party.
After a decade of rule by Congress, the BJP is expected to steer India sharply to the right.
He campaigned on promises of a revival in economic growth.
But many Indians still have profound concerns over Mr Modi because of claims he did little to stop the 2002 communal riots in Gujarat, in which at least 1,000 people died, most of them Muslims - allegations he has always denied and over which he was never charged.
The election result will be a crushing blow to the Congress party, which is led by the Nehru-Gandhi family and has dominated Indian politics since independence.
It reflects voter anger with Congress, which has been mired in serious corruption scandals and whose leadership has been considered ineffective in recent years, analysts say.India's Prime Minister Manmohan Singh rang Mr Modi to congratulate him on his victory.
The 63-year-old Mr Modi celebrated with a visit to his elderly mother in Gandhinagar, the state capital of Gujarat, after tweeting: "India has won. Good times ahead."
Latest election results showed the BJP is on course to win 278 seats, surpassing the 272 seats needed to secure a majority in the lower house of parliament.
With their allies, the party could achieve more than 300 seats.
Narendra Modi celebrated his victory with a visit to his mother in Gujarat
Supporters of the BJP began celebrating outside the party's headquarters even before the Congress party admitted defeat
The mood was sombre at the Congress party headquarters as the extent of their defeat became clear
More than 500 million votes are being counted, with the official results expected later on Friday
"The people of this country have given us a great responsibility," said BJP president Rajnath Singh at a news conference.
He said the resounding victory proved the BJP had "crossed the geographical, political and social boundaries" in its appeal to voters.
Meanwhile, the Congress party - which has been in power for the past decade - is leading in fewer than 50 seats.
Accepting defeat, the Congress Party spokesman, Shakil Ahmed, said: "We are accepting the people's verdict in all humility.
"Trends of the counting are certainly not in our favour. The trends point out that the country has decided to vote against us," he was quoted by news agency AP as saying.
Even before the Congress party's announcement, there were scenes of jubilation outside the BJP's headquarters in Delhi. Firecrackers exploded and people handed out sweets.
The mood was much more sombre at the Congress party's headquarters.
More than 500 million people voted in what is the world's biggest exercise in democracy.
Voter turnout in the mammoth nine-phase general election was a record 66.38%, beating the previous 1984 poll record.
Yogita Limaye reports: "There's great excitement because the stock market has hit another record high"
India Elections
- The India election is the world's biggest exercise in democracy, with 814 million eligible voters
- It started five weeks ago and was held in nine phases for security and logistical reasons
- A total of 551 million votes have been cast, with a record 66.38% voter turnout
- Election officials are counting at 989 centres, with more than 1,100 observers supervising the process
- Hundreds of thousands of security officers have also been deployed at counting centres
- India's parliament has 543 seats. The party or alliance which wins the majority forms the government
- A total of 8,251 candidates stood for election
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