Modi said in an address broadcast live that Indian scientists had destroyed a low earth orbit satellite with a missile, demonstrating India's capacity as a "space power" alongside the U.S., Russia and China.
Pallava Bagla, a science writer at the New Delhi Television Channel, said that by successfully hitting the fast-moving satellite, India had crossed a "very significant threshold."
"India demonstrated that we can, if threatened, bring down an enemy satellite in space," Bagla said.
The announcement is Modi's latest bid to flex India's military muscle as his party seeks to retain power in polls beginning April 11.
After 40 Indian soldiers were killed in a February suicide bombing in disputed Kashmir, India said it retaliated with a "surgical strike" on a terrorist camp in Pakistan.
Afterward in an air skirmish, Pakistan shot down one of India's Soviet-era fighter jets, prompting scrutiny of India's aging military hardware.
Modi said Wednesday that the new capability is "not against anyone," and that India's policy remains against the use of weapons in space.
Earlier this month, acting U.S. Defense Secretary Patrick Shanahan argued for a 2020 Pentagon budget shaped by national security threats posed by China, including anti-satellite weapons.