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Abstract Background Ni-kshay Poshan Yojana (NPY) is a direct benefit transfer scheme of the Government of India introduced in 2018 to support the additional nutritional requirements of persons with TB (PwTB). Our recent nationwide evaluation of implementation and utilization of NPY using programmatic data of PwTB from nine randomly selected Indian states, reported a 70% coverage and high median delay in benefit credit. We undertook a qualitative study between January and July 2023, to understand the detailed implementation process of NPY and explore the enablers and barriers to effective implementation and utilization of the NPY scheme. Methods We followed a grounded theory approach to inductively develop theoretical explanations for social phenomena through data generated from multiple sources. We conducted 36 in-depth interviews of national, district and field-level staff of the National Tuberculosis Elimination Programme (NTEP) and NPY beneficiaries from 30 districts across nine states of India, selected using theoretical sampling. An analytical framework developed through inductive coding of a set of six interviews, guided the coding of the subsequent interviews. Categories and themes emerged through constant comparison and the data collection continued until theoretical saturation. Results Stakeholders perceived NPY as a beneficial initiative. Strong political commitment from the state administration, mainstreaming of NTEP work with the district public healthcare delivery system, availability of good geographic and internet connectivity and state-specific grievance redressal mechanisms and innovations were identified as enablers of implementation. However, the complex, multi-level benefit approval process, difficulties in accessing banking services, perceived inadequacy of benefits and overworked human resources in the NTEP were identified as barriers to implementation and utilization. Conclusion The optimal utilization of NPY is enabled by strong political commitment and challenged by its lengthy implementation process and delayed disbursal of benefits. We recommend greater operational simplicity in NPY implementation, integrating NTEP activities with the public health system to reduce the burden on the program staff, and revising the benefit amount more equitably.