Does hosting location affects performance drastically?

Hi there!

In a word, yes. Sadly there's no real way around it - it just does take time for data to travel from the server to the end user. I'm in Australia and when I was blogging I typically bought hosting from the US because I write in english and most english speakers live in the US or Canada (Australia only has 22 million people). In the past I've had confused conversations with support about my site responding slowly and the support person (Who's likely in the same building/city as the server) is showing me screen shots that my website was loaded in about 1/3 the time lol!

You can use content delivery networks like cloudflare. Actually you probably should really, if you're on shared hosting and some big news site picks up one of your articles/pages and shares it, you're shared hosting will get overloaded pretty fast (no such thing as unlimited in the real world lol) although it's been my experience that on the free plans the difference really isn't much - cloudflare's pretty slow for free accounts, although it's still faster than going all the way to the US and massively reduces the bandwidth to your server.

The main thing to look at is not so much where you are, but where your audience is. If the site is going to be mostly serving to India, it's probably not worth it. Also response time is a big factor for SEO - google australia used to think my blog was really slow, but google US thought it was fast, and looking for the same article on the two different websites ranked the page differently. There are some tricks you can use like hosting images on github (github's cdn is really fast) and of course optimising everything. I have seen Some of the US companies also have server locations in east asia to tap the Chinese market - those might be closer?