Abstract In India, districts serve as central policy unit for program development, administration and implementation. The one-size-fits-all approach based on average prevalence estimates at the district level fails to capture the substantial small area variation. In addition to district average, heterogeneity within districts should be considered in policy design. The objective of this study was to quantify the extent of small area variation in child stunting, underweight and wasting across 36 states/Union Territories (UTs), 640 districts (and 543 PCs), and villages/blocks in India. We utilized the 4th round of Indian National Family Health Survey (NFHS-4) conducted in 2015–2016. The study population included 225,002 children aged 0–59 months whose height and weight information were available. Stunting was defined as height-for-age z-score below 2 SD from the World Health Organization child growth reference standards. Similarly, underweight and wasting were each defined as weight-for-age < -2 SD and weight-for-height < -2 SD from the age- and sex-specific medians. We adopted a four-level logistic regression model to partition the total variation in stunting, underweight and wasting. We computed precision-weighted prevalence of child anthropometric failures across districts and PCs as well as within-district/PC variation using standard deviation (SD) measures. For stunting, 56.4% (var: 0.237; SE: 0.008) of the total variation was attributed to villages/blocks, followed by 25.8% (var: 0.109; SE: 0.030) to states/UTs, and 17.7% (Var: 0.074; SE: 0.006) to districts. For underweight and wasting, villages/blocks accounted for 38.4% (var: 0.224; SE: 0.007) and 50% (var: 0.285; SE: 0.009), respectively, of the total contextual variance in India. Similar findings were shown in multilevel models incorporating PC as a geographical unit instead of districts. We found high positive correlations between mean prevalence and SD for stunting (r = 0.780, p < 0.001), underweight (r = 0.860, p < 0.001), and wasting (r = 0.857, p < 0.001) across all districts in India. A similar pattern of correlation was found for PCs. Within-district and within-PC variation are the primary source of variation for child malnutrition in India. Our results suggest the importance of considering heterogeneity within districts and PCs when planning and administering child nutrition policies.