The government, worried that militants could use BlackBerry's heavily encrypted services to plan attacks, warned earlier this month it would start blocking emails and instant messages sent on the smartphones unless the company comes up with a way for security agencies to decode the traffic by August 31.
There were indications late last week the deadline might be pushed back beyond Tuesday's deadline as BlackBerry's Canadian makers, Research in Motion (RIM), scrambled to satisfy the authorities.
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Minister of state for communications Sachin Pilot said he was "hopeful" a plan could be worked out with RIM.
The government -- keen to project India as a fast-growing, investor-friendly economy -- is "not in the business of shutting down services", Pilot said, but stressed New Delhi was also not ready to sacrifice its security interests.
"These concerns have been addressed in other parts of the world. I see no reason why the government and (security) agencies should take any risk at all as far as technology (is concerned)."
Analysts have noted other security-conscious nations such as China and Russia appear to be satisfied over their intelligence agencies' level of access to BlackBerry communications.
G.K. Pillai, the top bureaucrat in the home ministry, was due to hold a department meeting Monday to take a call on India's next step. Officials have suggested RIM might be given a one or two-month extension of the deadline.
BlackBerry users said they hoped a shutdown could be averted.
"It's as essential as food, water and shelter. A BlackBerry is a necessity for all the corporate guys, and the government can't afford to do that (a ban), that's for sure," said marketing manager Amit Deshmukh.
But the government has already told cellular operators to be prepared to shut off BlackBerry's corporate messaging services. Non-corporate emails are less heavily encrypted and can already be accessed by Indian security agencies.
For RIM, whose shares closed at a 52-week low on Friday of 45.99 dollars in New York, striking a deal with India is crucial and would help ensure the company is not shut out of the world's fastest-growing cellular market.
India, which has 1.1 million BlackBerry users, would be the first country to curb its services. But RIM is also facing a threatened ban by the United Arab Emirates and is negotiating with Saudi Arabia on security issues.
In a bid to head off a showdown, RIM offered Thursday to set up an "industry forum" to look at how to prevent misuse of the encrypted service while safeguarding corporate privacy.
RIM and analysts insist the company is unable to comply with demands to hand over codes allowing interception by security agencies. RIM says it has no "master key" to unlock encryption codes of clients which are set at the user level and argues the issue is an industry-wide concern.
"The industry forum would work closely with the Indian government and focus on developing recommendations for policies and processes aimed at preventing the misuse of strong encryption technologies," RIM said.
"Banning one solution, such as the BlackBerry solution, would be ineffective" and also "severely limit the effectiveness and productivity of India's corporations," RIM added.
"They are essentially trying to educate the government so it can stay ahead of the technology -- militants are not going to be going around using corporate emails, there are more sophisticated methods," Kunal Bajaj, director India of telecom consulting firm Analysys Mason, told AFP.
"I honestly do not think India will shut BlackBerry services down, it's just taking a bit of time to see what are the options and how to get what they're looking for," he added.
Nareshchandra Singh, principal research analyst at Gartner global consultancy, said there "could be some extension, but ultimately if the government doesn't get what it wants it could come to a ban."
