In the past five days, several people allegedly involved in the racket have been arrested. The head of the gang, according to police sources, is Sankala Peter Subbaiah, who ran the Good Samaritan Evangelical and Social Welfare Association, the adoption charity under investigation.
Subbaiah was arrested in a city hotel on Sunday, having evaded police when they raided the suburban house late last week.
Upstairs in the house, police found a dozen nurses tending 56 babies, some only a month old, and all under a year in age. Fifty-two were girls.
In a statement in the Andhra Pradesh state assembly, Madhava Reddy, the home minister, said early investigations had revealed Subbaiah's association was running a sophisticated operation selling the babies for adoption to childless couples in the West. The babies were bought from poor local people by hired go-betweens known as "social workers".
Mr Reddy said the "social workers" combed rural areas and poorer parts of Hyderabad to persuade families to sell their children for as little as 2,000 rupees (pounds 30) each.
He claimed that Subaiah and his accomplices then paid the go-betweens a commission of Rs20,000 (pounds 300) per child, lodged them in the creche pending the completion of emigration and adoption formalities and then finally sold them overseas at prices ranging from $2,000 to $3,000 (pounds 1,200 to 1,800).
The number of children sent overseas by the Good Samaritan Evangelical and Social Welfare Association is unknown. Police say, however, that records they have seized show Subbaiah had arranged for the overseas adoption of 32 children since January 1998 and that his close colleague,Sanjiva Rao, had dispatched a further nine children in the past six months.
Police believe the total number of children sold for adoption is more than 200. Most have gone to the United States, although dozens are currently in Western European countries, including Denmark, Germany, the Netherlands and France, the sources said.
So far, there is no evidence that any have reached Britain.
According to police, the racket was discovered after a woman was arrested in the process of buying a baby in a village in the rural district of Nalgonda, high on a wooded plateau 60 miles east of Hyderabad.
Through that suspect, they traced Margaret Sanyogitha - a key associate of Subbaiah now under arrest - who led them to the creche in the East Maradpully street house.
Efforts are also under way to trace the parents of the 56 babies found in the police raids. Most of the children come from families of "untouchables" - those at the bottom of India's caste hierarchy - living in poverty in the villages surrounding Hyderabad.
There have been other reports in recent months of parents in India who are so poor they are prepared to sell their children. In the poor state of Bihar, agricultural workers were recently said to be selling their children to local Buddhist monks who used them as domestic servants.
Subbaiah, 49, denies all of the charges against him and says he is the victim of a politically motivated smear.
He claims he is funded by a variety of Western charities, including Oxfam. He said Oxfam gave him Rs800,000 (pounds 13,000) between 1997-98 to fund childcare programmes.
A spokesman at the Oxfam office in Hyderabad said the charity had no record of any such transaction and had no link with Subbaiah.Reuse content