The two leaders then travelled to the presidential Elysee palace where they took part in a garden party.
At the event, Sarkozy said that "in 20 or 30 years India will be the most populated country in the world, it is a friend of France and above all it is the world's biggest democracy".
"India is a technology-hungry country and needs the support and commerical links a country like France can provide"
European Council on Foreign Relations
Singh paid tribute to France, saying that "in our own country our freedom struggle was immensely inspired by the French ideals of liberty, equality and fraternity".
Speaking to Al Jazeera, Daniel Korski, from the European Council on Foreign Relations, a pan-European think-tank, said: "This is very much about France's place in the world.
"What we have seen since Sarkozy came to power is the desire to plant a lot of French tricolores around the world, even in places where France has not been traditionally relevant, for example in the UAE.
"India is a technology-hungry country and needs the support and commerical links a country like France can provide, especially for its nuclear industry.
"So it's very much a political and commercial move by Sarkozy."
Earlier, a statement from Sarkozy's office said that the troops' presence shows France believes "India has a primary role on the international scene, and that we support India's candidacy to become a UN Security Council permanent member".
Sitanshu Kar, an Indian defence ministry spokesman, said last week: "It is a proud day for India as our troops will march in a country where they fought during World War I."
|The Indain contingent paraded to the sound of Indian martial music [EPA]
Indian soldiers under British command were part of two Allied divisions that fought the Germans around the northern French town of Neuve-Chapelle in 1915.
Singh, who was in Italy for the G8 summit, was invited to attend the July 14 French national holiday event as guest of honour by Sarkozy, who attended India's Republic Day celebrations in January 2008.
Singh last travelled to Paris in September 2008 to sign a major deal on civil nuclear co-operation between the two countries.
French state-controlled group Areva has signed a draft accord for the sale of up to six nuclear reactors to India, a huge new market now open after a nuclear trade embargo on New Delhi was lifted.
France is one of the key arms suppliers for India's technology-hungry military, and the French firm Dassault Aviation is in the race for a mammoth contract to supply 126 fighters to the Indian air force.
A jet contract could be worth up to $12bn.
France and India have been steadily developing strong military ties.
In April the Indian and French navies took part in anti-submarine exercises off the coast of the western state of Goa.
The Bastille Day parade, one of the capital's biggest annual events, lets France show off its military hardware. This years celebrations will end with parachutists being dropped onto the Champs Elysee.
The parade is held each year on July 14, the anniversary of the storming of the Bastille fortress in Paris by revolutionaries on July 14, 1789.
It was the symbolic starting point of the movement that led to the first French republic.