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Background: Objective structured practical examination (OSPE) is an effective tool to evaluate the practical skills competency of undergraduate medical students. OSPE is not commonly utilized in medical colleges in India due to imperatives of resources. The objective of the study was to compare the score of marks obtained by traditional practical examination (TPE) with OSPE for assessing skills competency to perform Gram and to know the students’ and teachers’ perception about OSPE. Materials and Methods: A total of 70 MBBS students were included in the study as “OSPE” and “TPE” groups; students were according to their college roll number randomly divided into two groups of 35 students each. The two groups were assessed for their skill competency to perform Gram stain using OSPE and TPE methods, respectively. Teacher’s opinion was analyzed for both the assessment methods with respect to objectivity, reliability, validity, feasibility, etc. Student’s input with respect to this OSPE technique was additionally obtained. Results: A total of 70 students were included in this study. The sex-wise differences in the student’s scores were not found statistically significant. There was statistically significant difference between the mean scores of TPE and OSPE (P < 0.05); the standard deviation of scores for Group-2 (OSPE group) also showed significance differences. Conclusion: Our study supports the introduction of OSPE in medical education for the evaluation of practical skills competencies of undergraduate medical students.