Research In Motion has assured India of limited access to BlackBerry instant messages by September 1, and promised talks this week on monitoring its more secure corporate email, a government source said on Monday.
RIM faces an August 31 deadline to give authorities the means to track and read BlackBerry Enterprise email and its separate BlackBerry Messenger service.
The government, concerned about the potential for militants to use the secure BlackBerry network to carry out attacks, has vowed to shut the services if RIM fails to comply, cutting it out of one of the world's fastest-growing telecoms market.
They have assured partial access to its Messenger services by September 1 and agreed to provide full access by the end of the year, a senior government source, who asked not to be named, told Reuters.
New Delhi says it will pull the plug on the two key BlackBerry services if Canada-based RIM does not comply. Some 1 million of RIM's 41 million customers live in India, where upcoming 3G network rollout is expected to boost smartphone growth.
We hope they will address our security concerns, an interior ministry official said.
A spokeswoman for Waterloo, Ontario-based RIM could not be reached immediately for comment.
India is not the only country pressuring RIM, which built the BlackBerry's reputation around confidentiality. That cachet among corporate and government professionals may be slipping as the firm accedes to some of those demands.
RIM shares slipped 4.8 percent in New York and Toronto trade. It has lost more than 11 percent of its market capitalization since August 1, when governments in Saudi Arabia and the United Arab Emirates said they would also consider a ban.
But some analysts say the fall has been overdone and expect a bounce as RIM resolves the issue.
It's trading at eight times earnings, it's growing at 30 percent a year. That doesn't sound logical, Toronto-based Scotia Capital analyst Gus Papageorgiou said.
Many business professionals and politicians prefer the device, but some governments, including Saudi Arabia, fear it could become a tool for terrorists or those breaking Islamic laws.
RIM has said security for its BlackBerry Enterprise service is based on a system where customers create their own key, and the company has neither a master key or any back door to allow RIM or any third party to gain access to crucial corporate data.
RIM officials are expected to hold talks with the Indian government to explain the complexities of the enterprise mail system and try to find a solution, the government source said.
India's demands follow a deal with Saudi Arabia, where a source said RIM had agreed to give authorities codes for BlackBerry Messenger users. The United Arab Emirates, Lebanon and Algeria are also seeking access.
India, like other countries, has been criticized for seeking blanket restrictions, while mobile phone operators say they must offer consumers privacy and secure communications.
(Additional reporting by Alastair Sharp in Toronto; Editing by Rina Chandran and David Holmes; Editing by Frank McGurty)