It definitely is a massive hit on the ego of the country.
For years they go on about being an IT powerhouse, software driven economy, H1Bs are mostly Indians and pushing FAANG companies to the top, etc. It's something they genuinely felt they had an edge on China. However, despite all the talent, there is not a single Indian "Killer App". Then China has TikTok, but they took solace in the likely US ban as a sign of weakness. So instead of Americans picking up the pieces of TikTok, you had another Chinese app which doesn't even have a proper English interface go viral. A very bitter pill.