It is advantageous for the target audience, if you are in an online business in India, You would certainly try to target the audience in India, having your servers in India is the best you can do.
Local hosting will help you to solve the traffic clashes, which generally arises due to the time-zone difference between the countries, slow browser speed and the network congestion are some of the problems.
Performance can certainly increase as the browser speed increases.
In case of some non-delivery , if both the client and hosting company are in the same country. The transaction can be at the comprehensive SLA.
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