An Internationalized Domain Name (IDN) is an Internet domain name that contains non-ASCII characters. Internationalizing Domain Names in Applications (IDNA) is a mechanism defined in 2003 for handling internationalized domain names containing non-ASCII characters. The non-ASCII domain names should be converted to a suitable ASCII-based form by web browsers as per IDNA specification. [rfc3490]
An IDNA-enabled browser is able to convert between the restricted-ASCII and non-ASCII representations of a domain. Check out http://www.हिन्दी.com/ and http://北京大学.cn/ [Peking University, China] which used non-ASCII domain names. For example, http://www.xn--j2bd4cyah0f.com/ is the ASCII representation of http://www.हिन्दी.com/. Mozilla 1.4, Netscape 7.1, Opera 7.11 and Safari are among the first applications to support IDNA. A browser plugin is available for Internet Explorer 6 to provide IDN support. Internet Explorer 7.0 and Windows Vista’s URL APIs provide native support for IDN.
The IDN implementation is very difficult in India, as we have a lot of languages and scripts. India has 22 official languages. The scripts for many languages also looks the same. For example, Tamil வ (U+0BB5) and Malayalam ഖ (U+0D16) looks the same. There are many similar issues with Hindi & Sanskrit too. Though it looks the same for the eyes, it is understood as two different characters by the domain name system. Using such variants, hackers can easily implement phishing.
i-DNS.net, currently supports domain name registrations in more than 60 languages. See sample Tamil domain names. Though i-IDN.net says that SynfoSys Business Soluttions Ltd is the Registrar Partners for India, I could not find out the URL for the same in their website. Is there one yet?