I just talked to Kiran Chandra of FSF India Andra Pradesh Chapter. His team is working on Telugu translations for GNU/Linux and finished some GNOME modules and applications. Also made a new OTF font called Srujana! Yeeehaah! another OTF font for Telugu. There are some problems with the font and translations, but I am sure the issues will be ironed out very very soon. The fonts and translated files are available at http://ap.gnu.org.in. There is also an XKB map that is supposedly more convenient for DTP publishers all over AP.

Kiran told me that his team can finish the translations in a matter for few months. We will be working together from now on. Status updates and releases will be happen at http://telugu.sarovar.org.