From Palestinian soil, Modi reiterated India's commitment to the Palestinian cause to allay apprehensions of a change in New Delhi's stance at a time its bond with Israel has strengthened.
"India hopes that soon Palestine will come a free country in a peaceful manner", he said.
"We hope for peace and stability in Palestine, we believe a permanent solution is possible with dialogue".
To cooperate in the field of Manpower, Government of India and Government of UAE signed an MoU that aims to institutionalise the collaborative administration of contractual employment of Indian workers in UAE.
"Now we see them both as mutually independent and exclusive and as part of this policy the prime minister is undertaking this visit." he explained.
Ahmad Majdalani, a PLO Executive Committee member, said that improved relations between Israel and India could benefit the Palestinians. In December, India backed a United Nations resolution that opposed the US decision to recognize Jerusalem as Israel's capital.
Meanwhile, US President Donald Trump's Jerusalem move causing loss of mediator's credibility in the Middle East crisis has given a fillip to India's position in the global arena.More news: Analysts Set Washington Real Estate Investment Trust (WRE) Price Target at $30.33
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Modi is scheduled to address the Indian community on Sunday in Dubai after witnessing the groundbreaking ceremony of a temple in Abu Dhabi.
The announcement regarding Modi's visit to Ramallah took many by surprise given the growing bonhomie around the Indo- Israel ties. It was back when India was one of the main leaders of the Non-Aligned Nations and embraced an anti-Israel stance. The Grand Collar is the highest Palestinian order given to foreign dignitaries - kings, heads of state/government and persons of similar rank.
Abbas said after their meeting that he remains committed to negotiations with Israel as the path toward Palestinian independence.
An MoU for Technical Cooperation in Rail Sector was also signed between Ministry of Railways, India and Federal Transport Authority - Land & Maritime of UAE.
Earlier, the two leaders exchanged hugs and stood for the national anthem of the two countries and then inspected the guard of honour before their bilateral talks.
Modi and his entourage flew in by helicopter from Jordan, landing near Abbas's Ramallah headquarters, an AFP reporter said.
In Ramallah that serves as the de facto capital of Palestine, PM Modi headed straight to the memorial of former President Yasser Arafat where he laid a wreath.