This study was done to evaluate the efficacy of telehealth programme for diabetic retinopathy and estimate the grading-agreement between digital fundus photography and indirect Ophthalmoscopy observations. The data were obtained from 511 diabetics examined at the six screening camps organized in rural south India. Topcon TRC NW 100 non-mydriatic camera was used to get digital single 450 fundus photographs (with dilated pupil) centered midway between the center of the macula and the disc. A retinal specialist in the base hospital evaluated the images.. Patients with sight threatening diabetic retinopathy were re-examined in the base hospital, and their fundus findings based on indirect ophthalmoscopy were compared with those obtained by digital fundus photography. Of the 1013 images, 22 (2.2%) could not be graded due to poor image quality. Of the remaining 991 images, the fundus was graded normal in 802 and abnormal with evidence of any diabetic retinopathy in 189 (19.1%). Of the 189 eyes with diabetic retinopathy, non-proliferative DR was evident in 159 (84.1%), proliferative DR in 30 (15.9%); macular edema was evident in 52 (27.5%) eyes. The grading-agreement of DR between digital photograph and indirect ophthalmoscope was good for any retinopathy versus no retinopathy (kappa value=0.79, 95%CI: 0.68-0.88). Similarly, grading-agreement between sight-threatening DR and no sight-threatening DR, as determined by ICC, was 0.76 (95% CI, 0.63-0.85).Telehealth programme is an effective tool of early detection of sight threatening complications of diabetic retinopathy. Its use can be extended for mass screening of patients in rural settings where availability of health care professionals is inadequate.