Research In Motion (RIM) is expected to be given an extension on the time frame in which it has to provide the Indian law enforcement agencies with access to data on its networks.
An official in the country's home ministry said on condition of anonymity that an extension from the earlier October 31 deadline set by the government is likely, as negotiations between RIM and the Indian government continue.
Two major newspapers in India have already reported that RIM's deadline has been extended to January.
But a spokesman for India's Department of Telecommunications (DOT) said no order to extend the deadline has yet been issued to RIM or service providers offering RIM services.
RIM's India spokesman said the company does not comment on confidential regulatory matters.
'Danger of terrorism'
The Indian government had earlier asked for access to communications on BlackBerry's enterprise service and its instant messaging application. It had threatened to block BlackBerry services offered by Indian operators if they did not comply.
The government is worried that online and mobile communications are increasingly being used by terrorists to plan their attacks.
The negotiations between the Indian government and RIM are stuck on the issue of access to RIM's business email and communications service, called the BlackBerry Enterprise Server.
'No back door'
RIM has maintained that it does not possess a 'master key', nor does any 'back door' exist in the system that would allow RIM or any third party, under any circumstances, to gain access to encrypted corporate information.
The BlackBerry security architecture for enterprise customers was designed to exclude the capability for RIM or any third party to read encrypted information, it said. RIM would be unable to accommodate any request for a copy of a customer's encryption key since at no time does RIM possess a copy of the key, it added.
"What RIM is saying is that the government should get access to these communications through corporate customers," a source close to the situation said.
RIM's BlackBerry internet service for consumers, by contrast, is provided through service providers and does not have RIM's encryption, the source said.
RIM has been facing criticism and threats of bans in a number of countries, although most of these issues appear to be have been diffused. The Telecommunications Regulatory Authority (TRA) of the United Arab Emirates (UAE), which had threatened a suspension of BlackBerry services from October 11, said last week that BlackBerry services are now compliant with the UAE's telecommunications regulations, but did not provide further details.
BlackBerry services in the UAE will continue to operate as normal, the TRA said.
RIM has been demanding that it should be treated on par with other communications technologies companies offering services in India. Google's Gmail and Skype are also under Indian government scrutiny, though there has been no formal demand from the government for interception rights.
See also: Internet versus the government