TLDR; India miscalculated.
There was no need for so much drama, creating a situation where there seems to be no off ramp for the Indian side. I said this early on the thread some 20/30 pages in that the Indian Government seem to have taken leave of their senses.
Emboldened by the rabid media megaphones who broadcast their messages of fear and anger among the people. The Indian Government tried to play this off as an incident akin to pearl harbour but the narrative building was doomed to fail from the start - as any observer who knows the area and region knowns the sheer amount of military manpower and equipment in the region.
For the Indian claim that a handful of people crossed the border, covered 169+ KM on foot, traversing some of the harshest terrain known to man with elevations >3000 meters, circumvent security check posts and patrols, carry out an attack, shoot hundreds of rounds less than 1000 yards from a security force HQ and keep shooting for up to 40 minutes before melting away back into Pakistan is something out of a poorly written fiction novel.
Sadly where India finds herself now is a very dangerous position, not just diplomatically but in terms of internal security, this constant labelling of Muslims as terrorists and pitting Indian Hindus against the local Indian Muslim population, the situation has escalated so far domestically that there is very serious threat of a grievous incident of communal violence, this is known as the pressure cooker effect.
Pakistan has offered India an off ramp at every junction, from joining in an independent inquiry to hosting high-level diplomatic meetings, but India kept ramping up the pressure under, the Indian government drunk and inebriated on its own impression of geo-strategic importance miscalculated their sphere of influence on the narrative and info-sphere.
Only one problem, no one is buying it, there is still time... What options are there for India to save face? Lob some missiles and arty our way in a tit for tat exchange, nab some poor hapless locals and label them ISI assets and call it a day?
Only time will tell where this takes us.