Based on various immigration forums, it appears that INS accepts passports that have expired. This makes complete sense because the INS is not concerned about your foreign citizenship. As long as your Green Card is valid-it is OK.
You have a couple of options:
1. Take a chance, send your Indian passport for renewal, and if it doesn't come back-postpone the interview-so you can have the passport at hand-This may NOT be the recommended option if the dates are very close.
2. Don't renew the passport, and let it expire. Go to the interview with the expired passport. In the unlikely event, the question about expired passport come up, explain the circumstances to the interviewing officer. It is highly unlikely that this question will even come up.
Normally, if your passport is ever checked, it isgenrally used to verify the travel dates you entered in the N-400.
Note that after the interview, you lose your Indian citizenship anyway, and that your Indian passport becomes INVALID.
Once you become an American citizen, you will have to apply for another passport category called Overseas Indian Passport. This passport has yet to be issued and the hope is that it will be issued within the next 48 months. Till that happens, you will need a visa to travel to India (or a PIO card).
