You may be out of luck. Even though Devnagari (Hindi, etc.) script works well in most text input areas like gedit, browsers, and word processors, it looks like complex indic scripts like Devnagari are not supported in the default gnome terminal. However, some people were working on Devanagari support on GNOME Terminal and the results are available here.
I have no idea how this tweaked version of gnome terminal will fit into Ubuntu. As usual use caution when installing programs, apps and codes from unknown sources.
Another option is to install
fbterm from Ubuntu Software Center. See the comments section of How can I get colors in TTY working correctly? for how to make it work.
Hope this helps