So, this story is about the internet service.

In the internet versio, the consumer emails sent via BB is served by local ISPs using a server provided by Blackberry called Blackberry Internet Service (BIS). This might communicate back with the RIM servers in Canada.

There are three possibilities.

1) RIM has probably just disabled encryption for their Indian accounts (accounts signed up via Reliance, Airtel, etc). The way they would do this is to disable encryption out of the BIS. I hope this is not the case because it would seriously compromise privacy.

2) RIM has provided the government with their private keys and also disabled advanced key exchange algorithms like Ephemeral Diffie Hellman.

3) The BIS security infrastructure is weak anyway and can be compromised. For example, the RIM servers can be made to negotiate a weak or null cipher. I doubt this would be the case.

The ET story you linked to talks a lot about decompression. I dont know the context in which that is relevant. It is trivial to decompress.