Dividing the people into two kinds - those who live and those who exist - Modi told the students to decide as to the kind they want to become and said education does not end at the convocation, but it is a continuous process.
Speaking at the 56th Convocation function of the Indian Institute of Technology, Madras (IITM), Modi said the foundation of the 21st century rests on three pillars - innovation, team work and technology.
He said, India is working towardbecoming a $5 trillion economy and the innovation, aspiration and application of technology of the students will make this dream come true.
He also urged the students to remember their motherland and its need wherever they work and live.
Modi told the young graduates that they are passing out at a time when the world is looking at India as the land of unique opportunities.
"During the US visit, I met many heads of states, business leaders, innovators, investors. In our discussions, there was one common thread. It was optimism about New India," Modi said.
He said the Indian community has made a mark for itself world over in science, technology and innovation and many of them were former IIT students.
Citing many IIT graduates entering the civil services, Modi told the students that they are making the brand India stronger.
Recalling his visit to IIT Research Park earlier in the day, Modi said he saw start-ups in electric mobility, Internet of Things, healthcare, artificial intelligence and they would create a unique Indian brand.
According to him, Indian innovation is a blend of economics and utility and urged the graduates to take up the toughest challenges and come up with solutions that are acceptable and workable.
Modi said the challenge for start-ups is finding a market for their products and the government's Start-Up India programme will extend help.
He urged the students not to stop dreaming as that is the way to evolve.
Modi also said the start-ups in India are powered by people from tier-2, 3 cities and rural India.
He urged the students to come up with a substitute for single-use plastics.
Modi also distributed prizes to the topper students.
Tamil Nadu Governor Banwarilal Purohit, Chief Minsiter K. Palaniswami, Deputy Chief Minister O. Panneerselvam, Union Minister for Human Resources Development Ramesh Pokhriyal Nishank and officials from IITM were also present on the occasion.
( With inputs from IANS )