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Hi @Swathi
Welcome to the Atlassian Community.
Yes, the more custom fields you have in your Jira instance can lead to a performance issues as custom fields can have multiple field context and are used in many issues and that could lead to a performance issues when you run a complex JQL search or loading a dashboards gadgets data from JQL query.
Please check the below document for how to effectively manage the custom fields in Jira
https://confluence.atlassian.com/enterprise/managing-custom-fields-in-jira-effectively-945523781.html
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