The 13-year-old has been rescued and taken to a state-run shelter home. She has told counselors that her parents would solicit customers and force her to have sex with the men.
Her mother has told a news channel that she would charge 3,000 rupees (£30; $47) from a customer for her daughter.
Police said they had identified 25 of the 40 customers who had allegedly paid for sex with the teenager.
Ten others, including a broker, have also been arrested in connection with the case. (s:bbc)