This is a simple mechanical project which requires some knowledge of electrical and electronics. I believe that kits for an automatic gear level indicator is available in market.
An automatic gear level indicator digitally displays the gear on which the vehicle is currently running. It doesn’t observe the transmission directly, instead, this is done calculating the speed of the vehicle and the rpm of the engine and then comparing both. The speeds of a vehicle are different for different gear levels even when the rpm is kept same. So by calculating the speed/rpm ratio for each gear level, the gear positions can be detected and displyed using an LCD screen. This will be different for different vehicles, so it is a must that you check these ratios with your experiment set up(The vehicle used for the experiment).
It is possible to integrate this system with boats, bikes and other machines. But for every machine you need to find out the speeds or rpm ranges for each gear shift.
For further details: http://www.doityourself.com/stry/installing-a-digital-gear-indicator-wiring