Research In Motion (RIM) has set up a facility in Mumbai to help the Indian government conduct surveillance checks on the company's BlackBerry services, the Wall Street Journal said on Friday.
The financial daily quoted unnamed people familiar with the matter who said the Canadian firm opened the centre earlier this year to deal with requests from Indian intelligence agencies.
No one was immediately available for comment at either RIM or India's telecoms ministry when contacted by AFP.
RIM and the Indian government have been embroiled in a row over access to BlackBerry services, in particular encrypted email and instant message facilities that New Delhi fears could be used by extremists to plot attacks.
Multiple deadlines have been issued to the firm to comply with government requests for monitoring.
The Wall Street Journal said RIM was now allowing surveillance of BlackBerry Internet services and the company was no longer facing the prospect of shutdowns.
RIM was complying with intercept requests on suspect individuals once it was satisfied the demand had legal authorisation, it added.
In January, Home Minister P. Chidambaram said RIM had already given India access to its instant messaging service and the government would press for access to the corporate email service.
India's Telecoms Minister Milind Deora was quoted as saying by the daily that the government still wants to "find some middle ground" with RIM.
For its part, RIM said India was "applying its security policy in a consistent manner to all handset makers and service providers in India, which means that RIM should not be singled out any more than any other provider".
India, which has the world's fastest-growing number of mobile users, has also told Google and Skype to set up servers in the country to allow law enforcers to screen traffic.
RIM has faced similar requests from governments in the Middle East and Asia. It has said it cannot give access to corporate email because the security keys are with individual companies.
Explore further: Lego to build on movie success, tackle globalisation challenge