The 182-metre (597-ft) steel and bronze "Statue of Unity", in the prime minister's western home state of Gujarat, is part of his Hindu nationalist party's efforts to re-brand what it calls "forgotten" leaders.
India on Wednesday inaugurated the world's tallest statue, a $400-million effigy of independence hero Vallabhbhai Patel that towers almost twice the height of New York's Statue of Liberty.
"No Indian will ever forget this day", said Mr Modi, who hailed Sardar Patel's "strategic thinking" in bringing together the disparate country after independence in 1947 and the Statue of Unity as "a symbol of our engineering and technical prowess".
The world's tallest statue was unveiled in India's Gujarat state on Wednesday in a ceremony filled with pomp, circumstance and heightened security.
Built on Sadhu Bet Island on Narmada river, the imposing statue is touted to be the world's tallest. The Communist Party of India has criticised the government for splurging money on the statue.
At a special function held at the capital's Patel Chowk, the President and others paid floral tributes at the statue of India's first Home Minister on his 143rd birthday anniversary, which is observed as "Rashtriya Ekta Divas".
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Farmers in the state of Gujarat were reportedly bemused that millions of dollars were spent on the flagship project.
China's Spring Temple Buddha statue, the previous record holder for tallest statue, took 11 years to finish, while the Statue of Liberty took nine years.
BJP chief Amit Shah, Gujarat chief minister Vijay Rupani, deputy chief minister Nitin Patel and Madhya Pradesh governor Anandiben Patel were also present on the occasion. He said while there was no objection over the monument built for Patel, what was surprising was why a bigger statue for the father of the nation, who was also born in Gujarat, was not thought of.
While campaigning in 2013 to become prime minister, Mr Modi said, "every Indian regrets that Sardar Patel did not become the first prime minister". The BBC reported that locals have expressed deep concern that they still lack basic irrigation facilities vital to the region's economy while mass investment has been diverted to a largely-ceremonial project.
Iron was procured from around the country to commemorate the "Iron Man of India".
The proposed Chhatrapati Shivaji Memorial, expected to be wrapped up in 2021, will stand at 212 metres.