First, as an Indian, I am least shocked at what the government is trying to do. This is what bureaucrats in India do best, that is, fleece money from businesses by pulling up arcane/useless laws and regulations. Behind closed doors, RIM must have bribed dozens of bureaucrats in at least half a dozen government departments. My father worked for an Indian company and was in charge of setting up a power generation plant. He said he had to bribe a dozen different ministries just to get the paperwork moving on prospecting for the site.
What's the value of Indian law enforcement agencies being able to tap into RIM? Zilch, squat, none, nada, nil, shunya! After all the circus around this issue, what brain-dead criminal will use blackberry to cover up tracks? This will mostly be used by politicians to settle scores, dig up dirt on each other and sell trade secrets of one business to other or harass them. As any Android or iPhone owner will know, just go to Android market place or iTunes store and there are dozens of apps for encrypting text messages and files. Not happy with closed source apps? Use openssl, gpg or half a dozen other opensource tools to encrypt communications such that no law enforcement agency can crack it in a timely manner to help with an investigation. Much less Indian law enforcement agencies that can barely use computers much less have access to super computers to do any cracking.
As for Indians, they are mostly pro-government on this issue. Why? Because RIM acceded to similar demands by UAE and Saudi Arabia so now their national pride is hurt when a foreign company complies with laws of tiny Emirates but not their mighty nation. People in India are tired of a non-functional government that does not take foreign corporations to task for even mass murder (read Bhopal Gas leak). So when they see a government department screw a foreign corporation, they cheer like this will somehow help. It WON'T!!!