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Background Respiratory distress (RD) is higher among newborns born by caesarean section (CS) compared to vaginal delivery. Royal College of Obstetricians and Gynaecologists recommend steroid administration for CS prior to 39 weeks. Effectiveness of steroids for neonatal RD at term is inconclusive. The racial differences are yet to be studied. Methods A single center retrospective cohort study was conducted in Colombo, Sri Lanka from December 2016 to February 2019. All mothers delivered by CS between 37+0 and 38+6 weeks were included. Mothers with severe maternal hypertension, fetal rhesus sensitization, intrauterine infection, multiple pregnancies and who received steroids at a prior gestation were excluded. Cohort was subdivided according to administration of intramuscular dexamethasone prior to CS. Primary outcomes measured were RD, admissions to neonatal intensive care unit (NICU) and special care baby unit (SCBU). Neonatal infections and maternal duration of hospital stay were recorded as secondary outcome measures. Results 560 patients were included. 23.2% of patients received antenatal corticosteroids. Incidence of RD, NICU admissions and SCBU admissions in the study cohort was 10%, 0.9%, and 2.7% respectively. Relative risk for developing RD in the steroid group compared to non-steroid group was 2.67 (95CI 1.64-4.35). 4.6% of the steroid group and 3.3% of the non-steroid group needed to be admitted to the NICU/SCBU (p=0.464). A significantly higher number of babies in the steroid group needed IV antibiotics. The average number of days the mothers were admitted to the hospital was 2.45 days (SD+/- 1.424) for steroid group and 1.4 days (SD+/- 0.856) for the non-steroid group (p < 0.001). Conclusions There is a significant increase in the respiratory morbidity in the dexamethasone administered south Asian mothers at term prior to CS. However, this effect has no clinical significance since the admissions to NICU and SCBU were not significantly different.