Honestly, haven't followed the story in any depth so I don't know the details. It does seems weird that a lone soldier would just get lost in the wilderness and stray across to the other side.
Indians languishing in Pak jails ? no idea, they keep doing these captured fishermen exchanges regularly though, and every now and then some border village idiot crosses onto the other side but are often escorted back and set free.
Full hostilities have not (yet) broken out so couldn't keep him hostage.
Like I said, haven't followed the story, you can fill us in on what you know.
Yes, international SOPs were followed and Pakistan handed over our downed pilot, all in accordance with the Geneva conventions.
Pak scored an air kill, a propaganda victory, and furthered that coup with what appeared to be a magnanimous gesture.