I just came across this newspaper article titled "PM Modi features in Netanyahu's election campaign in Israel". I was wondering if the word "features" can be used this way or should it be "featured"?
Yes, the usage of features as a verb is correct:
be a significant characteristic of or take an important part in.
It is an unusual way to use that word given how the title is structured, but my guess is that this term was chosen to reduce the length of the title, given that the abbreviation PM is used. Another reason could be that the publisher wanted to make the important person (Modi) involving themselves in the event (the election campaign) more prominent by placing them at the start of the title.
A better way of reading the title is by rearranging the contents of it (and removing one of the in's) as such:
Netanyahu's election campaign in Israel features PM Modi
The only way past tense can be used is if the article was created after the spectacle occurred.