Sustainable Development Goal 3 (SDG 3) seeks to ensure healthy lives and promote well-being for all at all ages. In India, Local Self-Government Institutions (LSGIs) serve as important mechanisms for decentralised governance and grassroots healthcare delivery. The 73rd and 74th Constitutional Amendments have strengthened the role of local bodies in addressing public health and welfare needs. Nevertheless, the effective contribution of LSGIs towards achieving SDG 3 is constrained by several institutional and operational limitations. This paper examines the major challenges faced by LSGIs in delivering accessible, affordable, equitable, and quality healthcare services in India. It focuses on financial constraints, inadequate healthcare infrastructure, shortages of trained healthcare personnel, limited technical capacity, administrative inefficiencies, overlapping functions, bureaucratic delays, and insufficient coordination between local, state, and central authorities. These challenges affect the capacity of LSGIs to effectively address key SDG 3 targets, including universal health coverage, maternal and child health, disease prevention, and equitable access to essential healthcare services. The study adopts a doctrinal and analytical methodology based on constitutional provisions, legislation, government policies, official reports, and relevant scholarly literature. It argues that strengthening the financial autonomy, institutional capacity, infrastructure, human resources, and inter-governmental coordination of LSGIs is essential for improving grassroots healthcare delivery and accelerating India’s progress towards SDG 3.