The Ministry of Home Affairs has told the service provider that it will have to shut shop in India unless it comes up with a way to enable security agencies to monitor data transfers on its system.
Blackberry services are encrypted and cannot be accessed on any other servers.
The home ministry has reiterated its threat to Blackberry after receiving a fresh warning from the Intelligence Bureau (IB) that Blackberry could pose a threat to the national security as it can be used by terror elements to plot and execute a strike as security agencies cannot intercept the messages exchanged.
The government's move comes days after UAE raised concerns over social and security risks posed by BlackBerry services.
MHA has also directed the Department of Telecommunications (DoT) to verify recent reports that Blackberry has set up a server in China.
If this is verified, the government will pressurise Blackberry to set up a server in India, where nearly a million subscribers get their services routed through its server in Canada.