Google Labs has come out with a new and cool tool for Indians. It is called ‘Indic Transliteration’, here is what it does as Google puts it:
Google Indic Transliteration offers an option for converting Roman characters to the Devan?gar? characters used in Hindi. This lets you type Hindi words phonetically in English script and still have them appear in their correct alphabet. Note that this is not the same as translation — it is the sound of the words that are converted from one alphabet to the other, not their meaning.
This is a great tool, considering that most of us would have till now used some sort of software to get this type of result. The good thing is that it converts the text word on word basis, so it convert to Devan?gar? once a word is entered and a space is keyed. See below for an example.

Once the Hindi word appears, if you are not happy with the word displayed, you can click on it and change the word from the various ones displayed or change it manually. It is great that Google keeps coming out with such good tools, especially like these which can be run from the web directly. Also another great aspect is that Google also has a dedicated section in Labs for India related products.
Visit Google Indic Transliteration
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now you have two options here
Similar technology is implemented by Banglore based company “tachyon”. check it out at http://quillpad.in