Neonatal mortality rate in India is high and stagnant. Special Care Newborn Units (SCNUs) are being set up to provide quality level II newborn care services in district hospitals of several districts to meet this challenge. The units are located in some of the remotest districts where the burden of neonatal deaths and accessibility to special care is a concern. A recently concluded evaluation of these units indicates that it is possible to provide quality level II newborn care in district hospitals. However, there are critical constraints such as availability and skills of human resources, maintenance of equipment and bed occupancy. It is not the SCNU alone but an active network of SCNU (level II care), neonatal stabilization units (level I care) and newborn care corners can impact neonatal mortality rate reduction higher. Number of beds is also not sufficient to cater to the increasing demand of such services. Available number of nurses is a problem in many such units. An effective and sustainable system to maintain and repair the equipment is essential. Scaling up these units would require squarely addressing these issues.