In your given example Id
column in Project
table have to be a Primary key(or atleast UNIQUE constraint) in order to be able to reference it in any other column i.e creating a foreign key constraint which references it same is true for Id
column in Application
table. So by default it will have a Clustered Index defined on it.
Now in your ProjectApplication
table if you do create a foreign Key and create an Index on that column, and obviously when ever you need to retrieve information from these tables you will be joining these tables on these two fields so having a Clustered Index on one side and a nonclustered index on other side will most definitely have a great impact on the performance of your queries, well worth it , go for it .