Prime Minister Narendra Modi and visiting Afghan President Ashraf Ghani on Wednesday denounced the sponsorship of terror in the region and vowed to further deepen bilateral cooperation.

India also pledged one billion dollars for the support and development of "a unified, sovereign, democratic, peaceful, stable and prosperous Afghanistan".

Ghani is on a two-day visit to India starting Wednesday.

"The two leaders discussed the regional situation and expressed grave concern at continued use of terrorism and violence in the region for achieving political objectives," a joint statement issued at the end of the meeting said.

"They agreed that this phenomenon presented the single biggest threat to peace, stability and progress in the region and beyond."

"Stressing that elimination of all forms of terrorism, without any discrimination, is essential, they called upon the concerned to put an end to all sponsorship, support, safe havens and sanctuaries to terrorists, including for those who target Afghanistan and India," it said.

Modi and Ghani reaffirmed their resolve to counter terrorism and strengthen security and defence cooperation as envisaged in the India-Afghanistan Strategic Partnership Agreement.

The two sides also signed an Extradition Treaty, an agreement on cooperation in civil and commercial matters and a memorandum of understanding (MoU) on cooperation in peaceful use of outer space.

"The Prime Minister reiterated India's abiding support for a unified, sovereign, democratic, peaceful, stable and prosperous Afghanistan. He conveyed India's readiness to consider further requirements of Afghanistan for capacity and capability building in spheres such as education, health, agriculture, skill development, empowerment of women, energy, infrastructure and strengthening of democratic institutions.

"To this end, the Prime Minister offered that... India would allocate a sum of $1 billion. The Prime Minister also proposed to supply world class and easily affordable medicines from India and cooperation in solar energy through mutually agreed instruments," the MEA statement said.

The two sides also discussed quick implementation of the trilateral agreement involving Afghanistan, India and Iran, signed in May 2016, using Chahbahar port.