The phrase "a grave setback" is correct and usable in written English.
It can be used to describe a significant or serious obstacle or hindrance to progress in a situation or project.
Example: "The unexpected loss of funding was a grave setback for the research team, delaying their project by several months."
Alternatives: "a serious obstacle" or "a major hindrance."
Losing him because of this would be a grave setback and I hope it will be unnecessary.
The triumph of democracy and tolerance in Iraq, in Afghanistan and beyond would be a grave setback for international terrorism.
France could scarcely afford to its security was too tightly bound to Russia's but France's policy of wooing Italy out of the Triple Alliance was a grave setback, not for Germany but for Austria-Hungary.
But the settlement of October 1465 was a grave setback for the king, whose brother Charles gained title to Normandy while Charles the Bold, soon to inherit Burgundy, acquired strategic counties and towns in Artois.
Had Bain & Company collapsed, insiders say, it would have dealt a grave setback to Bain Capital, where Romney went on to build a personal fortune valued at as much as $250 million.
The outcome seems a grave setback to hopes for a solution to the looming international crisis over Iran's nuclear ambitions and for détente with the US in response to Barack Obama's overtures.
MOSCOW — The Russian government said Wednesday that it would not renew a hugely successful 20-year partnership with the United States to safeguard and dismantle nuclear and chemical weapons in the former Soviet Union when the program expires next spring, a potentially grave setback in the already fraying relationship between the former cold war enemies.
This week it had another grave setback, as American regulators announced a ban on imports from a new factory that was supposed to solve Ranbaxy's quality problems.In May the company hoped to put its troubles behind it, by agreeing to a $500m settlement with the US Department of Justice.
Losing glyphosate would be a serious setback.
Mr President, Guatemala, home to an ancient culture, is a country that has, again and again, suffered grave setbacks.
Make no mistake about it, this is the gravest setback to Portugal's two-year-old bail-out programme - and there have been quite a few of them over the past several months, including legal ones.
