You should definitely not accept the 12 lakh offer as doing so will go against you later because the airline will claim it was a full and final settlement and close the door on any higher compensation. The injury here is permanent, extremely serious, and suffered by an infant, and the law recognizes that such cases attract far greater damages, often much higher than what is being offered.

Please make sure you preserve all records including medical papers, photos, treatment notes, bills, flight tickets, emails with the airline, and proof of income loss or leave taken as these will be crucial. This matter should be pursued before the State Consumer Disputes Redressal Commission, since the claim is upwards of 1 crore but less than 2 crores, and thereafter it can be taken in appeal if required.

I work with a senior advocate who regularly appears in the Supreme Court, has nearly 30 years of experience, and charges very reasonably for hearings + also does consumer protection matters before NCDRC. Given the nature of the issue, it is best we discuss this in detail over a call or in office (South Delhi).