Encoding and Character Sets in Koha
From Koha Wiki
MySQL
At a bare minimum, for MySQL make sure you have the following in the [mysqld] section of your /etc/mysql/my.cnf:
init-connect = 'SET NAMES utf8' character-set-server=utf8 collation-server=utf8_general_ci character_set_client=utf8
Then restart mysql with: /etc/init.d/mysql restart
See also: MySQL 5.1 Reference Manual :: 9.1 Character Set Support for information about choosing different collations (which will affect how some things are sorted in Koha).
Apache
For Apache make sure you have these lines in your /etc/apache2/httpd.conf (or for ubuntu in /etc/apache2/conf.d/charset ):
AddCharset UTF-8 .utf8 AddDefaultCharset UTF-8
Above copied from http://kohakenya.wordpress.com/koha-installation/
Then restart apache with: /etc/init.d/apache2 restart
Ubuntu
To set locale on ubuntu:
sudo update-locale LANG=en_IN.UTF-8
You have to log out and back in to see locale change reflected in the locale command.