Is it true that the Indians do not know what curry is? Or is that just an urban myth?
It's complicated.
Us Indians certainly know of the concept of "curry", but its usage depends on the region.
I'm Gujarati and we don't typically use the word "curry" for our dishes that would normally be described as "curry" outside of India (OSR and my fellow Atlas-Gujjus, please feel free to chime in). We have specific names for these dishes. The same goes for a lot of other Indian states/sub-cultures.
On the other hand, I have Tamil friends who use the word "curry" quite often (pronounced "kah-ri") and this makes sense: the word "curry" is thought to be derived from the Tamil "kari" (meaning "sauce for rice").
So, in short: it's an urban myth in the sense that we definitely know what *curry* is and what it represents to the world outside of India. But its specific usage within India becomes more muddled.