The victims, who had been sold to factories and brick kilns, were being transported on a bus when police intercepted the vehicle following a tip-off from anti-trafficking campaigners in Bastar district of Chhattisgarh state on Wednesday.
"We have rescued 20 minor boys and 13 girls. Rest of them are adults and were sold as bonded labourers," Bastar child protection officer Vijay Shankar Sharma told AFP.
They were sold for thousands of rupees (tens of dollars) each to factory owners in the southern states of Andhra Pradesh and Telangana, Sharma said.
Police also arrested a five-member gang on trafficking charges.
The children were at a rehabilitation centre and would be sent back to their homes.
All the victims are from tribes in resource-rich Bastar and adjoining districts. The area is the epicentre of a decades old insurgency by armed Maoist rebels fighting for land, jobs and other rights for poor ethnic groups.
Traffickers lure thousands of vulnerable children from rural areas on false promises of jobs before selling them off to factories, prostitution, forced labour or begging.
More than 14 million adults and children are trapped in modern slavery in India, the most of any country, according to the Walk Free Foundation's 2014 Global Slavery Index. India's official statistics grossly underestimate the crime with only 5,466 cases of human traffickingreported in 2014.
