The accident, on a long-distance service from New Delhi, occurred in the early morning near the town of Nellore in Andhra Pradesh state. An electrical short circuit is seen as the most likely cause.

Images showed dozens of rescuers, survivors and crowds of onlookers milling around as the blackened and twisted bodies of victims were lifted out and laid in rows alongside the railway line.

Family members of the victims wailed and screamed, while other dazed survivors sat around quietly with their belongings.

"I woke up when people were rushing into our compartment. I was in S-10, which was attached to the S-11 coach that caught fire," passenger Shantanu, who gave one name only, told reporters.

"There was smoke all around. We tried to open the emergency window, people jumped out of it."

The central government press office said that 32 people had lost their lives and 25 had been injured, with $9000 offered to the families of the deceased.

Nellore chief district official B Sreedhar said preliminary investigations suggested a short circuit near a toilet had triggered the blaze.

Railway Minister Mukul Roy said an investigation was under way.

The train was travelling at 110km/h when it passed through Nellore Station, where staff noticed the fire and informed railway authorities.

The burning carriage was quickly detached from the rest of the train to prevent the fire from spreading.

India's accident-prone rail network is still the main form of long-distance travel in the huge country despite fierce competition from private airlines.

There were two fatal accidents this May alone, including a collision that killed 25 people near the southern city of Bangalore.

Four passengers also died after a train was derailed in the northern state of Uttar Pradesh.

Prime Minister Manmohan Singh sent his condolences over the deaths and has asked the national railways ministry to coordinate the relief effort, his office said.

The then railway minister Dinesh Trivedi unveiled a draft budget for 2012-13 in March that included a major safety upgrade to be financed by across-the-board fare hikes.

But he was forced to withdraw it and resign after a rebellion from his own populist party, the Trinamool Congress, which objected to increasing ticket prices for the poorest travellers.