The animals were being rustled from Maharashtra state and sold in neighbouring Andhra Pradesh, where some communities believe eating donkey meat can increase strength and virility.
Demand for donkeys can not be met in Andhra Pradesh itself as their numbers have been falling as farmers replace them with machines. So the thieves saw an opportunity.
The gang was selling each donkey for 10,000 rupees ($152), R.R. Sayad, an assistant police inspector, said.
The thieves had modified a pick-up truck with stalls so they could nab up to 10 donkeys at a time and had made several trips in the last few months, Sayad said.
Indian farmers never secure donkeys with a rope, as they do with sacred cows or buffaloes, making the gang's job easier. Police suspect there might be more donkey rustlers on the prowl.
"Now many farmers are approaching us and informing us about missing donkeys," Sayad said.