By itself not a very major military disaster. After all, Great Britain had recovered from much severer blow in the beginning of the Second World War. The Indian Policy makers and later their military advisers, however, never realised as to what hit them. The Indian Army has still not recovered from the complexes developed since 1962. So frightened is the Indian polity of the Chinese that, they ostrich like, refuse to consider China as a major threat and cover up their inadequacies by their bellicose drumming up of the Pakistani threat.
Chinese aims are transparently clear.
China has been asserting her claims, to the position of a world power since the 50s, with complete South Asia from the Red Sea to the Pacific as her area of hegemony. The only threat, to her perceptions has been India. She knows it and is, therefore, preparing for en eventual show down. She has at present the largest Army in the world and her air force places her, next only to United States of America and to a degree Russia. Technically, though her armed forces were and are still far behind the technologically, leading, countries of the world, she is closing the gap fairly fast.