Due to the vast socioeconomic diversity among its residents, studying health inequality in India is of particular interest. This study aimed to investigate the wealth-based inequalities in physical frailty and to quantify the contributions of potential predictors of frailty to this inequality. Data were drawn from the first wave of the Longitudinal Ageing Study in India (LASI) conducted during 2017–18. Logistic regression analysis was used to examine the association between wealth status and frailty. We used the concentration index to measure the magnitude of wealth-related inequality in frailty. A decomposition analysis based on the logit model was used to assess the contribution of each predictor to the total inequality. The prevalence of physical frailty was significantly higher among the older adults in the poor group than in the non-poor group [Difference (poor vs. non-poor): 6.4%; p < 0.001]. Regression results indicated that older adults in the poorest group were 23% more likely to be physically frail than those in the richest category [Adjusted odds ratio (AOR) = 1.23; 95% confidence interval (CI): 1.11, 1.38]. The overall concentration index of frailty was 0.058 among the older adults, indicating that frailty is more concentrated among older adults with poor wealth status. Body mass index, wealth index, educational status, and region were the major and significant contributors to the socioeconomic status (SES) related inequalities in frailty. Results suggest the need for formulating effective prevention and intervention strategies to decelerate the development of physical frailty among older adults in India, especially those with poor socioeconomic background.