The proportion of individuals with mental disorders receiving evidence based treatments in India is very small. In order to address this huge treatment gap, programme for improving mental health care is being implemented in Sehore district of Madhya Pradesh, India. The aim of this study was to complete the situational analysis consisting of two parts; document review of Sehore district mental health programme followed by a qualitative study. The findings suggest that there are major health system challenges in developing and implementing the mental health care plan to be delivered through primary health care system in Sehore district.