The purpose of this study was to examine (a) the socioeconomic status (SES)-related inequalities associated with handgrip strength (HGS); and (b) the extent to which several demographic, health, and behavioral factors contributed to such SES disparities in HGS among older adults in India. Data were drawn from the 2017–2018 wave 1 of the Longitudinal Ageing Study of India (LASI). The study sample included 27,707 older adults (13,199 men and 14,508 women) aged 60 years and older. HGS was assessed using a handheld Smedley's Hand Dynamometer with a cut-off of 19.5 kg for men and 12.5 kg for women. Bivariate analysis showed the weighted percentage distribution of weak HGS across respondent characteristics. Multivariate logistic regression assessed factors linked to weak HGS. The concentration curve and index (CCI) was used to determine the inequalities in the prevalence of weak HGS by wealth index scores. Wagstaff's decomposition approach was used to test the contribution of each explanatory variable to weak HGS. Around 9% of older adults in this study reported a weak HGS. It was significantly higher among those aged 80 or older (19.21%) and males (15.55%). Weak HGS was concentrated among older adults from poor SES (CCI: 0.05, p < 0.001). A higher percentage of wealth-based inequality in weak HGS was explained by being underweight (38.83%), belonging to the richest wealth quintile (27.95%), and having a higher subjective social status (32.20%). Moreover, about 23.29% of the inequality in weak HGS was explained by Western region and 22.54% by female gender. Additionally, having a secondary level of education explained a higher percentage (22.09%) of inequality, followed by current working status (− 20.68%). Rural residence (13.08%), limitations in instrumental activities of daily living (IADL) (12.21%), and engagement in yoga-related activities (11.55%) explained a higher percentage of wealth-based inequalities. The findings provide evidence of significant SES-related inequalities in HGS and the contribution of various demographic, health, and behavioral factors to such inequality. As such, public health policies and programs focusing on reducing the burden of disability must consider the contribution of social and economic equity to the preservation of muscle strength among older adults.