India’s Universal Immunization Programme has been performing at a sub-optimal level over the past decade, with there being a wide disparity in terms of immunization coverage between states. This study investigates the covariates that affect immunization rates and inequality in India at the individual and district levels. We used data from the five rounds of the National Family Health Survey (NFHS), conducted from 1992–1993 to 2019–2021. We used multilevel binary logistic regression analysis to examine the association between demographic, socio-economic and healthcare factors and a child’s full immunization status. Further, we used the Fairlie decomposition technique to understand the relative contribution of explanatory variables to a child’s full immunization status between districts with different immunization coverage levels. We found that 76% of children received full immunization in 2019–2021. Children from less wealthy families, urban backgrounds, Muslims, and those with illiterate mothers were found to have lower chances of receiving full immunization. There is no evidence that gender and caste disparities have an impact on immunization coverage in India. We found that having a child’s health card is the most significant contributor to reducing the disparities that exist regarding children’s full immunization between mid- and low-performing districts. Our study suggests that healthcare-related variables are more crucial than demographic and socio-economic variables when determining ways in which to improve immunization coverage in Indian districts.