Up to 200,000 children a year fall into the hands of slave traders in India, many sold by their poverty-stricken parents for as little as £11. Now a group of activists has set out to rescue them from a life in the sweatshops of Delhi

Azam was seven when his mother decided the time had come for him to go out to work. There were too many mouths to feed and no money coming in since her husband deserted her. And there were no opportunities in their village of Basagaon, which lies at the farthest and most desperate end of Bihar, the poorest state in India. Here more than half the population exist below the official poverty line of 22 rupees [25p] a day.

Anjura Khatun knew what to do. The next time the child trafficker came to the village, they agreed a price. A few days later, Azam was on a train to Delhi.

The boy was initially proud of his new role as family breadwinner. "My mum does not work, so I took the responsibility for feeding my family," he told the Observer, puffing out his chest. He has a sister and a brother, but Azam, now nine, is the first born. And after two nightmarish years in Delhi, he is older and wiser.

From his arrival in the Indian capital, Azam worked in a plastics workshop, sorting through waste from 9am to 10pm. The boys lived six to a tiny room. He hated every minute of every day. "All we were doing was surviving," he says. "Every night when I went to sleep I was missing my village.

"I was waiting and waiting for the owner to pay me so I could bring some money home for my mum. But the owner never gave us money. At first he said to wait for a few days, but then weeks went by and then months, and he never gave us anything."

Azam wanted to escape, but he did not dare. "The man who took me to Delhi asked permission from my mum so I didn't think I could go back."

He looks sideways at his mother. The 30-year-old looks away and fiddles with the hem of her bright yellow sari. She never worried about Azam while he was away, she says. Her husband had left her for another woman. They were desperate. "We had no money, no food. I had to send him to work. He was the oldest. We needed to eat. What else could I do?"

Stories like this are repeated daily across the poorer regions of India. An estimated half a million children work in Delhi alone, many of them uprooted and three-quarters of them below the age of 14. Many are trafficked there by India's army of slave traders, stolen, tricked or sold by their parents for as little as 1,000 rupees (£11).

No one is quite sure how big the Indian slave trade might be; estimates range from 150,000 to 200,000 children a year. But India is under increasing pressure to get a grip on the practice. In June, the US state department labelled India as a child-trafficking hub and urged the country to bring its laws into line with UN conventions. A series of raids to free child labourers in Delhi has heaped on the pressure, and the country's labour minister has promised a new law banning all child labour.

But Gursharan Kaur, wife of Indian prime minister Manmohan Singh, says that, for real change to happen, Indian attitudes to child labour must change. "If everyone decides that they will not employ children, it will help a lot. It is the poor who send their children to work due to their low earnings. If their own families do not understand the child's rights, who will?" she said last month.

An answer to that despairing question is emerging in the form of the activists of Bachpan Bachao Andolan (Save the Childhood Movement). Late last month in the Bihar town of Katihar, accompanied by the Observer, rescuers from the group intercepted the Seemanchal Express bound for Delhi, tipped off that a group of young children had boarded the train in Nepal, apparently unaccompanied by parents. It was the first operation of its kind.

At 11.15pm, the white facade of Katihar station was bathed in light. Inside, people slept sprawled on the platforms and in the booking hall. On a far platform, a train stood waiting to leave, its long, blue-painted carriageways crammed with boys standing, sitting and lying in luggage racks.

Inside the carriage the temperature was stifling, the stench of unwashed bodies and stale urine overwhelming. One small boy peered nervously out of the darkness at the far end of the narrow corridor. Suddenly hands stretched out towards the boys as soothing voices told them not to worry, and pulled them forward on to the platform, where they stood blinking in fear and confusion, as the train departed.

The children come from all over India, but the state of Bihar is the hub of the trade, the poorest, the most desperate part of the country. Here, up against the border with Nepal, many parents are only too glad to have one less mouth to feed, one more member of the family bringing in a handful of rupees. The trade is at its height in the farthest reaches of the state, in the poverty-stricken countryside around the down-at-heel towns of Katihar and Sitamarhi.

The rescuers worked long into the night, calming the boys, taking their names, contacting their parents. Some had travelled from Nepal, some from nearby villages. It was 2.30am when the boys are decanted into a grubby hotel near the station.

The next day, when their parents arrived to collect them, there were few smiles. Many of the adults had the look of people who had just lost winning lottery tickets.

Back in Basagaon, 40 miles north-east of Katihar, those who have been rescued and returned crowd into the yard of the largest building in the village. Some of their mothers are here, but there is no sign of the fathers.

Like Anjura Khatun, the other boys' mothers plead poverty and say they had no choice but to send their children away to work.

Nehiar Khathun's eyes are sunk deep in her face. She is 35 and sick, she says. She needs medicine. This is why she sent her son, Tahir, to Delhi. There was no choice. There were three boys and three girls to feed. Someone had to bring in the money, and her husband was no longer around. "All day I am working, I have all sorts of diseases, I need medical help. Who can help me? We have no money, no food. What is the point of studying?" she says. "Better that he starts working and earns some money so that I can have my treatments."

Tahir boarded the train to Delhi in 2010, taken by a local trafficker called Javed. He was rescued six months ago, but his mother says she wants him to go back. Tahir looks at his feet as he talks. He wants to study to be an engineer. But he knows they need the money he can earn now. "I want that my sisters and brothers can get a good meal," he says. Tahir is 10.

The traffickers promise the parents that the children will be earning good money – anything from 700 rupees [£8] a month to 3,000 rupees [£34]. But none of the children gathered in the courtyard were ever paid more than a handful of rupees for their work.

Mohammed Abzal, 10, and Mohammed Saddam, 11, disappeared from Basagaon two years ago. Their mother, 35-year-old Lal Bannu, says the family were desperate. Her husband was working in Kolkata and Javed said the brothers could earn 1,400 rupees a month in Delhi. The boys worked there for two years before they were rescued.

"I said they should go to earn, we needed the money," she says, her voice emotionless. "I wanted them to start earning. Money was a priority. My husband never sent us anything."

None of the mothers will admit that they took money in exchange for their children, but activists working in the villages say that a price of between 1,000 rupees and 3,000 rupees is the norm. And the money is desperately needed. Welfare schemes designed to protect the poorest rarely filter down to those who need it most.

The boys look around the muddy courtyard. Nothing has changed since they first left, they say. Their mother still has no money, no way to feed them. They seem oblivious to the falling rain. There is nothing here for us, they say. There is no point in staying. It would be better for everyone if we went back.

Avdesh Kumar slipped away from Bhubharo village, in the countryside outside Sitamarhi, when he was 10. He dreamed of Delhi, could not see the point of school and anyway, everyone in the village felt he should be out working. When the local trafficker, Rama Shankar, suggested he go to the capital, he leaped at the chance. The older man sent a rickshaw to pick up Avdesh and four of his friends, who had slipped away from their homes in the early morning. All were excited at the adventure, certain that they were going to make their fortunes. As the train slipped through the countryside, Avdesh stood by the door and watched the world go by. It was his first time on a train. "I thought that if the train went any faster then it would fly," he says.

His friend Pappo Kumar thought Delhi would be like the New York they had seen in the movies. It was a tradition in his village that children went out to work when they reached the age of eight, he said, and that made sense to the gang of friends. But Shankar had tricked them. "When we reached Delhi I saw a lot of crowds and people going very fast and it was very beautiful. But we hardly got a chance to see it. From that Friday we worked every day, for 17 hours every day, sewing saris."

For the next 14 months, they were kept as prisoners, 49 boys to a room 30ft long and 15ft wide. Only for a few hours on a Sunday would their owner unlock the grille across their door and allow a few of them out, under strict escort, to wander round the local market. Avdesh was never one of those allowed out. He lived his life in that room, ate there, slept there, worked there day after day.

"I wanted to see the city. I wanted to see my parents. But I had been kidnapped and there was never the chance to go out," he says. "I was trapped. Every day I wanted to run, but I did not know any way home."

The promised money never materialised. It had all been for nothing.

Most of the children who are rescued are taken to Bachpan Bachao Andolan's ashram on the outskirts of Delhi. When their parents are traced, they are given 20,000 rupees by the government to make a fresh start and a letter warning the parents that they will face jail if the child is found working again.

When the Seemanchal Express that had been ambushed in Katihar finally pulled into Delhi, traffickers rounded up the children who had remained on the train and shepherded their cargo towards the doors. But the police, alerted by Bachpan Bachao Andolan, were waiting for them on this occasion. The remaining 31 children are led away to safety, but not before they have pointed out the traffickers.

The children told police that the men paid their parents as much as 3,000 rupees to buy them. Twenty traffickers were arrested. In theory, they could face years in jail, but the reality of the Indian justice system is that within months most, if not all, will be out on bail. Few will ever face a court.

Back in Bihar, more children are already boarding trains. The slave trade goes on.