BACKGROUND: Hand hygiene is a simple and low-cost measure to reduce healthcare associated infection yet it has always been a concern in low as well as high resource settings across the globe. Poor hand hygiene during intra-partum and newborn care may result in sepsis, which is a major cause of death among newborns and puts a financial burden on already strained health systems. METHODS: We conducted non-participatory observations in newborn care units and labour rooms from secondary and tertiary level, public and private hospitals, as part of a baseline evaluation of a quality improvement collaborative across two southern states of India. We assessed hand hygiene compliance during examinations and common procedures, using tools adapted from internationally recommended checklists and World Health Organization's concept of five moments of hand hygiene. We assessed differences in compliance by type (public/private), level (secondary/tertiary) and case load (low/intermediate/high). Analysis was adjusted for clustering and weighted as appropriate. RESULTS: We included 49 newborn care units (19 private, 30 public) and 35 labour rooms (5 private, 30 public) that granted permission. We observed 3661 contacts with newborns and their environment, 242 per-vaginal examinations and 235 deliveries. For the newborns, a greater proportion of contacts in private newborn units than public complied with all steps of hand hygiene (44% vs 12%, p < 0.001), and similarly in tertiary than secondary units (33% vs 12%, p < 0.001) but there was no evidence of a difference by case load of the facility (low load-28%; intermediate load-14%; high load- 24%, p = 0.246). The component with lowest compliance was glove usage where indicated (20%). For deliveries, hand hygiene compliance before delivery was universal in private facilities but seen in only about one-quarter of observations in public facilities (100% vs 27%, p = 0.012). Average overall compliance for hand-hygiene during per-vaginal examinations was 35% and we found no evidence of differences by type of facility. CONCLUSION: Observed compliance with hand hygiene was low overall, although better in private than public facilities in both newborn units and labour rooms. Glove usage was a particular problem in newborn care units. TRIAL REGISTRATION: Retrospectively registered with Clinical Trials Registry- India ( CTRI/2018/04/013014 ).