Combination antiretroviral therapy (ART) has improved in efficacy, durability and tolerability. Virological efficacy studies in India are limited. We determined incidence and predictors of virological failure among patients initiating first-line ART and described virological resuppression after confirmed failure, with the goal of informing national policy. Therapy-naïve patients initiated on first-line ART as per national guidelines were monitored every 3months for adherence and virological response over 2years. Genotyping on baseline samples was performed to assess primary drug resistance. Multivariate Cox regression analysis was used to assess predictors of virological failure. Virological failure rate among 599 eligible patients was 10.7 failures per 100 person-years. Cumulative failure incidence was 13.2% in the first year and 16.5% over 2years. Patients initiated on tenofovir had a significantly lower rate of virological failure than those on stavudine or zidovudine (6.7 vs. 11.9 failures per 100 person-years, P=0.013). Virological failure was independently associated with age <40years, mean adherence <95%, non-tenofovir-containing regimens and presence of primary drug resistance. In a subset of 311 patients who were reassessed after treatment failure, 19% (11/58) patients resuppressed their viral load to <400 copies/ml after confirmed virological failure. Our results support the inclusion of tenofovir as first-line ART in resource-limited settings and a role for regular adherence counselling and virological monitoring for enhanced treatment success. Detection of early virological failure should provide an opportunity to augment adherence counselling and repeat viral load testing before therapy switch is considered.