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Hosting your site in a server located in India has some advantages. Relatively uncrowded lines, shorter access route. Three important factors are pointing in favour of hosting your website in a server located in India.
  1. Speed of Access
  2. Indian Domain Names
  3. Security & Legal issues
1. Speed
Earlier, information from one network to another India will often travel via USA! Now, with the implementation of an internet backbone by VSNL, this anomaly has been removed resulting in speedier access and relatively less traffic routes.

A user anywhere in India can reach a server in India passing through just 3 or 4 Computers. Whereas, the same user will have to pass no less than 15 - 17 Computers to reach an US based server. All these are happening in the background with most users blissfully unaware about this.

The difference in time required must be fractions of a second normally. But still, users can get stuck sometimes in a peak traffic somewhere in the USA or in between, and your website seem to take ages to appear. US has the largest server installations and most of the internet traffic around the world are still bound for USA.

It really looks smart if your site always appear on the user's screen within seconds. It will help in your image of reliability & stability.

2. Indian Domain Names
Going by the world trend of having country specific names, if you prefer to have Indian domain name such as '.co.in' etc., You must host your site in India. This is a pre-condition for registering Indian domain names (see Domain Name Registration).

3. Security & legal issues
This is not the least of concerns. It is preferable not to get sued by customers of any kind. But in the unfortunate event of such a legal wrangle, it is better to be on home ground. Distribution of information, goods and service are automatically subject to the law of the land your site was hosted. Imagine, if someone prefers to file a libel suite in the US.

Security-wise you just have to take the word of your hosting service provider. Chances to verify are very rare.

So, if you are an Indian company catering only to Indian customers (NRIs included), it is safe bet to host your site in India. Think it over.

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Plan your site
You may have an idea of what to display in your website. If you don't, defining target audience is a good place to start.
Maintaining your site
In to-day's business getting a customer is one thing, retaining them is a bigger challenge. The customer should keep coming back, sometimes bringing a friend along. That's a new customer for you.
How much it all costs you
Apart from promoting the sites, the net can be used to your advantage in Contest & Carnival participation.
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