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Prannoy, seeded eighth, will now take on third-seeded Japanese Kodai Naraoka.
Young Indian Priyanshu Rajawat also exited the season's last BWF Super 750 event.
The badminton star started training with the Indian legend at the end of August.
The Asian Games bronze medallist Indian, who returned to action after recovering from a back injury, squandered an opening game advantage to lose narrowly to world No. 12 Chen.
The top-seeded Indian combination went down to world No. 21 Lu Ching Yao and Yang Po Han of Chinese Taipei in a 63-minute match.
Last week, the 28-year-old was forced to concede her second round match against Thailand's Supanida Katethong at the French Open.
Rather than succumbing to the sedentary temptation of holidaying, create enjoyable activities that include some level of mobility to avoid being overweight.
The country's record haul swelled to 99 on the penultimate day of the competitions.
Sindhu pocketed the first game 21-18 and the second game was level 1-1 before the Indian felt discomfort on her left knee.
Indian para athletes made history by winning the country's highest number of medals (80) in the Games.