BlackBerry faces possible restriction in India

(Updates with comment from government official in seventh paragraph.)

 

Bloomberg -- Research In Motion Ltd.’s BlackBerry service may be banned in India unless the Canadian company agrees to resolve security concerns, according to a government official with direct knowledge of the matter.

 

India has told Research In Motion to set up a proxy server in the country to enable security agencies to monitor e-mail traffic, according to three government officials, who declined to be identified as the information is confidential.

 

Research In Motion faces increased competition from smartphones including Apple Inc.’s iPhone in India as the world’s second-biggest mobile-phone market prepares to roll out third-generation wireless services. The BlackBerry maker had some services blocked in neighboring Pakistan this year, and the United Arab Emirates is considering tightening security.

 

“RIM has the best encryption, significant subscribers, and a brand that’s known across the world,” said Anshul Gupta, principal research analyst at Gartner Inc. in Mumbai. “This isn’t the first time a government has had the fear that terrorists could use BlackBerry services for international communication.”

 

Resolving the concerns is crucial for Research In Motion to maintain its market leadership in India, Gupta said.