Neonatal units in teaching and non-teaching hospitals both in public and private hospitals have been increasing in number in the country since the sixties. In 1994, a District Newborn Care Programme was introduced as a part of the Child Survival and Safe Motherhood Programme (CSSM) in 26 districts. Inpatient care of small and sick newborns in the public health system got a boost under National Rural Health Mission with the launch of the national programme on facility-based newborn care (FBNC). This has led to a nationwide creation of Newborn Care Corners (NBCC) at every point of child birth, newborn stabilization units (NBSUs) at First Referral Units (FRUs) and special newborn care units (SNCUs) at district hospitals. Guidelines and toolkits for standardized infrastructure, human resources and services at each level have been developed and a system of reporting data on FBNC created. Till March 2015, there were 565 SNCUs, 1904 NBSUs and 14 163 NBCCs operating in the country. There has been considerable progress in operationalizing SNCUs at the district hospitals; however establishing a network of SNCUs, NBSUs and NBCCs as a composite functional unit of newborn care continuum at the district level has lagged behind. NBSUs, the first point of referral for the sick newborn, have not received the desired attention and have remained a weak link in most districts. Other challenges include shortage of physicians, and hospital beds and absence of mechanisms for timely repair of equipment. With admission protocols not being adequately followed and a weak NBSU system, SNCUs are faced with the problem of admission overload and poor quality of care. Applying best practices of care at SNCUs, creating more NBSU linkages and strengthening NBCCs are important steps toward improving quality of FBNC. This can be further improved with regular monitoring and mentoring from experienced pediatricians, and nurses drawn from medical colleges and the private sector. In addition there is a need to further increase such units to address the unmet need of facility-based care.