Research in Motion (NASDAQ:RIMM) offered a network data-analysis system in its Indian offices as a way to settle a dispute with the Indian government over access to encrypted traffic, the Economic Times of India reported Thursday, but PC Magazine said that RIM called the report a mistake based on misunderstanding.

“Earlier this month, RIM had offered a cloud-based solution to India’s home ministry, but the latter then sought changes after it was found that intercepted and decoded data was flowing via the Internet from the Canadian company’s servers in Europe to that of mobile networks here,” the newspaper reported from New Delhi.

“Unfortunately, the story in The Economic Times contains inaccurate and misleading information, presumably as a result of confusion over terminology and a lack of understanding about the different security models inherent in BlackBerry Messenger (BBM) and BlackBerry Enterprise Service (BES),” the magazine quoted RIM as saying in a statement to PC.

The Times has said RIM faces a Jan. 31 deadline for coming up with a way for the government to get access to the traffic for national security reasons.

The magazine said RIM disputed that, too.

The Times quoted an internal memorandum as saying, ”In the final solution proposed by RIM, the decoding will be automatic. Intercepted and decoded data will not travel out of India. RIM has proposed to install NDAS in India. In the final solution, intercepted and decoded data will travel between service providers and RIM India.”

According to PC, RIM said the system to which the paper referred is ”simply the name of a tool required to allow carriers in India to provide lawful access to RIM’s customer services, including BBM.”

Ministry deputy director Arvind Kumar wrote the note, the Times said.

India has been one of the fastest-growing markets for the BlackBerry, in part because of the security it offers, the newspaper noted.

RIM is establishing a research and development center in the Triangle.

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