What is transliteration?
Google Translator Toolkit offers an automatic transliteration option for converting Roman characters to Arabic or the Indic characters used in Bengali, Gujarati, Hindi, Kannada, Malayalam, Marathi, Nepali, Punjabi (Gurmukhi), Tamil, and Telugu. This lets you type these languages phonetically in English script and still have them appear in their correct alphabet. Note that this is not the same as translation -- the sound of the words is converted from one alphabet to the other, not the meaning.
To enable or disable transliteration, click the transliteration icon at the top of the editor.
Typing with Transliteration
The button above toggles transliteration on and off (you can also use Ctrl+G as a shortcut). When it's on, it affects the text and comments on your translation. The letters of a word will appear as you type them until you reach the end of the word. As soon as you type a space or a punctuation mark, the letters will be converted to Indic characters.
The transliteration will attempt to match the sounds of the letters as accurately as possible between the two alphabets. If you find that it's incorrect, however, you can fix it.