The Indian Government issued the ultimatum to RIM last month saying that if it did not hand over the encryption keys or locate its servers in India, it would terminate BlackBerry services across the country.
The Indian market is important to RIM, with several hundred thousand devices already sold.
But according to RIM, the threatened service shutdown will not happen.
"I don't expect there will be a service interruption in India," RIM's global head of security Scott Totzke told SC Magazine yesterday.
Totzke tried to downplay the significance of the escalating situation in India, saying it was "unfortunate" the story had been reported so widely.
"We have customers in 135 countries and there are various regulatory concerns. India is no different," said Totzke. "It's just a little unfortunate that we have seen a lot of information in the local press of what goes on."
The Indian Government is thought to have been in discussions with RIM for three months over gaining access to users' data. The government is thought to want access to aid its fight against terrorism in the country. It believes many potential terrorists are using BlackBerry devices to communicate.
Totzke said that RIM would not yield to India's demands. The Indian Government has reportedly demanded what it calls a 'master key' to decrypt messages.
"The customer owns and creates the keys independent of the operator and RIM. We can't provide a 'master key'. We can't do anything to help retrieve that data," Totzke said.
The Indian Government's second demand is for RIM to locate BlackBerry servers in India.
While RIM insists moving servers would have no effect on security, there are signs it might be prepared to compromise on that demand.
An executive at one of India's five BlackBerry service providers told Indian newspaper The Economic Times last month that moving BlackBerry servers to India is an "unresolved issue" for which "RIM does not want to bear the cost".
Speaking to SC Magazine yesterday, Totzke declined to comment on whether RIM would yield to this demand.
He added: "The talks continue to be ongoing and are positive and productive. They are not necessarily as frequent as reported in the media.
"I am hopeful of a solution in the near future that satisfies everyone and protects the confidentiality of the BlackBerry solution and our customers' data."
Totzke said: "RIM has discussions with all the governments. Most don't end up in the media. Our partnership with the UK government is extremely productive".
It's not been all plain sailing for RIM in government circles, though.
The UK Government has placed restrictions on the use of some civil servants' BlackBerry devices following the leak of two sets of secret documents last week.
The Irish and French Governments have also invoked either partial or total bans on the technology.