Research In Motion's encrypted BlackBerry email and instant messaging services will be shut down if the Canadian maker does not address Indian national security concerns by August 31, the government said on Thursday.
The ultimatum was issued hours after senior officials from government, intelligence and state-run telecom operators met to discuss how to gain access to the content, the latest global headache for Research In Motion (RIM).
In a matter of a few weeks, the BlackBerry device -- long the darling of the world's CEOs and politicians, including U.S. President Barack Obama -- has become a target for its sealed email and messaging services with governments around the world.
The Indian government said in a statement that if its demands were not met phone operators would be required by law to close the rock-solid encrypted BlackBerry Enterprise email and Messenger services running through their networks.
If a technical solution is not provided by 31st August, 2010, the Government will review the position and take steps to block these two services from the network, the government said.
Shares in RIM traded down C$2.06 at C$56.72 in a Toronto market that was down 0.4 percent by 1349 GMT. The Waterloo, Ontario-based company has declined to comment on the talks.
The Indian demands follow a deal with Saudi Arabia, where a source said Research In Motion agreed to give authorities codes for BlackBerry Messenger users. The United Arab Emirates, Lebanon and Algeria also seek access.
Bharti Airtel and Vodafone's India unit are the largest providers of BlackBerry services in India, the world's fastest growing mobile phone market.
A shutdown would affect one million of the smartphone's 41 million users. India is one of RIM's fastest growing markets.
If a shutdown takes effect, BlackBerry users in India would only be able to use the devices for calls and Internet browsing.
RIM has assured us they will come with some solution. It remains to be seen whether they address our security concerns, a senior internal security official, who declined to be identified, told Reuters.
India wants access in a readable format to encrypted BlackBerry communication, on grounds it could be used by militants. Pakistani-based militants used mobile and satellite phones in the 2008 Mumbai attacks that killed 166 people.
Officials say RIM had proposed tracking emails without sharing encryption details, but that was not enough.
This year, India restricted imports of Chinese telecoms network equipment over security fears. It is also worried about the introduction of 3G wireless services with no monitoring system in place.
RIM, unlike rivals Nokia and Apple, operates its own network through secure servers located in Canada and other countries, such as Britain.
The BlackBerry image could suffer if users feel RIM has compromised its Enterprise email system. Corporate and consumer customers both use its BlackBerry Messenger instant messaging.
Competitors have eaten into RIM's once-dominant share of the North American smartphone market, pushing the company to look to places like India and Saudi Arabia for growth.
The German government has urged staffers not to use the BlackBerry and several ministries have banned them. The European Union Commission this month rejected the BlackBerry in favor of Apple's iPhone and HTC smartphones.
India seeks access to both email and instant messaging, while Saudi Arabia has only targeted the messaging service.
RIM has said BlackBerry's Enterprise system lets customers create their own key, and the company has neither a master key nor a back door to allow it or any third party to access crucial corporate data.
Middle Eastern countries are concerned that BlackBerry users may spread pornography or violate restrictions on contact between unrelated men and women.
Bharti Airtel, India's largest mobile operator, ended nearly 0.7 percentage down on the day at 317.55 rupees mainly due to concerns on earnings. The broader market was up 0.02 percent.
RIM officials met India's interior minister separately on Thursday, a government source said. There were no more details.
(Additional reporting by Devidutta Tripathy and Krittivas Mukherjee; Writing by Alistair Scrutton and Paul de Bendern; Editing by Ron Popeski)