Here are the latest developments:
PM Modi was mobbed by enthusiastic fans who clamoured for photographs as he arrived at the venue, dressed in a white shirt with a blue half-sleeved jacket. The reception has been organised by members of the Indian-Australian community.
Outside the Allphones arena, there is Indian food, people in Modi masks, drummers and dancers. About 5,000 people who could not get tickets to the show inside will watch Mr Modi speak on big screens outside the venue. At the arena, 100 members of the Shiamak Davar dance troupe will perform.
"Hello Sydney!" said a tweet from the Prime Minister's Office, accompanied by a photo of Mr Modi waving as he arrived at the Sydney airport this morning. PM Modi, who is the first Indian prime minister to visit Australia in 28 years, will be in Sydney for six hours.
At Sydney's Pullman Hotel, four aboriginal dancers performed in welcome and Mr Modi was gifted a boomerang. Mr Modi tweeted a photo and said, "Amazing welcome in Sydney. Glad to be here."
"Modi fever grips Sydney," the Canberra Times said in a headline on Sunday. "The city will get a dose of Modi-mania when the Indian Prime Minister makes a quick-fire, high-energy visit," the newspaper said in a report in its online edition.
About 220 Modi fans traveled 11 hours from Melbourne to Sydney on a specially chartered train decked in India's national colours, being called the "Modi Express." A Modi fan said the "Prime Minister is lifting the image of India worldwide." Another said it was "an honour just to get a glimpse of the PM."
A special Gujarati thali was served on board the train. At Melbourne, and on the Modi Express, there was a carnival-like atmosphere - Indians waved the national flag and sang and danced. There are around 450,000 people of Indian origin in Australia, including many from the student community.
Volunteers who took days off from work to organise the Sydney event, have promised a reception more grand than the one Mr Modi received in September at the famous Madison Square Garden in New York, the playground of the biggest rock stars.
PM Modi arrived in Sydney after three days in Brisbane, where he attended the annual G20 summit. At a breakfast meeting there with businessmen this morning, the PM, dressed in a grey suit with a peach-coloured shirt, assured them that they will find a difference in doing business with India now and promised, "The government is focused on eliminating unnecessary laws and regulations, making processes easier and shorter."
After six hectic hours in Sydney, PM Modi will leave for Canberra and then will visit Melbourne. He is visiting four cities in Australia as part of a 10-day, three-nation tour. He will visit Fiji while on his way back to India from Australia.
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