The maker of the smartphone, Canada's Research In Motion, faces an August 31 deadline to give India the means to track and read its secure email that officials fear have the potential to be misused by militants.

The source, who is close to the negotiations with RIM, said Indian security and telecom agencies will hold "technical" meetings with the firm on Thursday and Friday for a solution.

"We are hopeful of arriving at a positive solution," the source said.

If RIM fails to comply then it would be cut out of one of the world's fastest-growing telecoms market.

More: http://www.reuters.com/article/idUSTRE67N3LR20100824