Two of the babies have now been rescued by police from the 30-bed Palash Hospital in the Gwalior district.
Prateek Kumar, from the ASP crime branch, told Times of India: ‘Three others have been sold to childless couples in Uttar Pradesh and Chhattisgarh’.
Police raided the hospital on Saturday night following a tip off about trafficking of infants.
A case was registered after the hospital management could not provide the whereabouts of two babies found at the hospital.
Five people have charged, including hospitals director TK Gupta, with buying or disposing of any person as slave, habitual dealing in slaves and buying minor for the purpose of prostitution.
The hospital manager, Arun Bhadoria,was also arrested.
A police officer said: ‘When a girl or her parents approached them for termination of pregnancies, doctors at this hospital used to convince them assuring a safe and secret delivery.
‘Once baby is delivered and mother gets discharged, hospital authorities start hunting for gullible couples who could buy them.’
In one case, a new born girl was swapped with a boy, he added.
Rani Bilkhu, from the charity Jeena International, has campaigned against sex-selective abortion in the past.
She told Metro.co.uk: ‘It is concerning that health professionals who are expected to act in the best interests of their patients are being lead by financial gain. Human trafficking must be tackled on a multi prong approach.