Karzai has proposed a plan to reintegrate low-level fighters back into Afghan society by offering jobs and support, while he has also sought to reconcile with the group's senior figures provided they give up their weapons.
New Delhi is concerned that bringing the Taliban back into the political system could increase regional rival Pakistan's influence in the country.
The two leaders also discussed assaults on Indian targets by Taliban and al-Qaeda fighters in Afghanistan, including two major bomb attacks on the Indian embassy in the Afghan capital, in which scores of people died.
"Nothing will prevent the friendship and partnership from continuing between the two nations"
Officials in New Delhi say groups such as the Pakistani-based, Lashkar-e-Taiba, have the support of Pakistan's military and they have accused the fighters of mounting attacks against Indians in Kabul as part of a south Asian "proxy war."
Without mentioning Pakistan by name, Singh said the embassy attacks in Kabul in February "were the handiwork of those who do not wish to see the emergence of a strong, independent and pluralistic Afghanistan".
India also blames the Lashkar-e-Taiba for the Mumbai attacks in November 2008 that left 166 people dead.
Singh stressed that the attacks would not undermine India's commitment to Afghanistan.
"I conveyed to President Karzai that the perpetrators of such attacks will not succeed in undermining India's commitment to assist the Afghan people," he said in a statement.
Over the past decade, India has spent more than $1 billion to help rebuild Afghanistan's infrastructure by building roads, schools, hospitals and dams.
India is also involved in training the country's police forces and its diplomatic corps.
"India remains committed to assisting the government and people of Afghanistan in their efforts towards the reconstruction and development of their country," Singh said.
Earlier, at a meeting with the Indian president, Karzai assured Pratibha Patil that the deep relations between the two countries would continue despite the attacks on Indian targets.
"Nothing will prevent the friendship and partnership from continuing between the two nations," he said, according to an Afghan government statement issued in Kabul.
Karzai is en route to a meeting of South Asian leaders in Bhutan on Wednesday.