Objectives The World Health Organization (WHO) recommends induction of labour (IOL) for low risk pregnancy from 41+0 gestational weeks (GW). Nevertheless, in Sri Lanka IOL at 40 GW is common practice. This study aimed to compare maternal/newborn outcomes after IOL versus spontaneous onset of labour (SOL) at 40 GW (IOL40) and 41 GW (IOL41). Design Observational study. Setting De Soysa Teaching Hospital for Women, Colombo, the largest maternity hospital in Sri Lanka. Population Low risk pregnancies at 40 or 41 GW. Methods Data from a routine prospective individual patient database were analysed. IOL and SOL groups were compared using logistic regression. Main Outcome Measures Births with one or more negative maternal/newborn outcome/s; maternal/newborn complications; caesarean section (CS); operative vaginal delivery. Results Of 13670 deliveries, 2359 (17.4%) were singleton and low risk at 40 or 41 GW. Of these, 456 (19.3%) women underwent IOL40, 318 (13.5%) IOL41, and 1585 (67.2%) SOL. Both IOL40 and IOL41 were associated with an increased risk of any maternal/newborn negative outcomes (OR=2.21, 95%CI=1.75-2.77, p<0.001 and OR=1.91, 95%CI=1.47-2.48, p<0.001 respectively), maternal complications (OR=2.18, 95%CI=1.71-2.77, p<0.001 and OR=2.34, 95%CI=1.78-3.07, p<0.001 respectively) and CS (OR=2.75, 95%CI=2.07-3.65, p<0.001 and OR=3.01, 95%CI=2.21-4.12, p<0.001 respectively). Results did not change in secondary and sensitivity analyses. Conclusions Both IOL groups were associated with higher risk of negative outcomes compared to SOL. These findings, though potentially explained by selection bias, local IOL protocols and CS practices, are valuable for the Sri Lankan context, particularly given contradictory findings from other settings.