India said on Friday it was hopeful the makers of the BlackBerry smartphone would come up with a solution to security worries and avert a threatened shut-down of the firm's services next week.

India has warned Research in Motion (RIM), the maker of the BlackBerry, that it will block its messaging services on August 31 unless the company enables security forces to monitor highly encrypted e-mail sent from the handsets.

"These concerns have been addressed in other parts of the world. I see no reason why the Indian government and agencies should take any risk at all as far as technology is concerned," junior communications minister Sachin Pilot said.

At the same time, Mr Pilot held out an olive branch to the Canadian company, telling reporters in New Delhi the government was "not in the business of shutting down services".

"Discussions are going on (with RIM) and we’re hopeful we will come up with resolution." His comments came as Business Standard reported the telecom ministry was "likely" to suggest a one or two-month extension to next Tuesday's deadline to give RIM extra time.

India, battling insurgencies from Kashmir in the northwest to the far-flung northeast, fears encrypted BlackBerry communications could be used by militants. Islamist militants used mobile phones to coordinate the 2008 Mumbai attacks, which killed 166 people.

A shutdown would affect corporate users among BlackBerry's 1.1 million customers, whose communications have a higher level of encryption than other phones can provide. India can already monitor BlackBerry "consumer mails", for which encryption is weaker.

RIM, whose shares have hit a 17-month low due to the row, made an offer late Thursday to set up an industry forum to develop standards that would balance India's security concerns with corporate privacy needs.

India, the world's fastest-growing mobile market, is a crucial region for RIM as increasingly affluent Indians are buying smartphones. The company faces growing competition from Apple, Nokia and other smartphones.

A home ministry official said "technical talks" were underway between RIM representatives and government officials. "The final decision" would be made Monday but may not be announced until Tuesday, he said.

"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 in a statement.

But it underlined strong encryption in wireless technology was "an industry-wide matter". "Banning one solution, such as the BlackBerry solution, would be ineffective and counter productive" and would also "severely limit the effectiveness and productivity of India’s corporations," it said.

Nareshchandra Singh, principal research analyst at Gartner global consultancy, told AFP that an extension to the deadline was a possible outcome. "There could be some extension, but ultimately if the government doesn't get what it wants it could come to a ban," he said.

He noted, however, that other security-conscious countries such as China and Russia appeared satisfied that their intelligence agencies were capable of accessing BlackBerry communications.

BlackBerry users said they hoped a ban could be averted. "I’m completely at sea without the BlackBerry. I couldn’t imagine a day without it," said Manish More, Mumbai based-manager of Roechling Engineering Plastics, India.

India has already sent a notice to mobile operators ordering them to ensure security agencies can monitor BlackBerry messages by the end of the month.