"We are ready to hand over the Indian pilot if it leads to de-escalation," foreign ministry spokesman Mohammad Faisal told AFP, attributing the statement to Foreign Minister Shah Mehmood Qureshi.

He spoke a day after the pilot, Wing Commander Abhinandan Varthaman, was shot down in a rare aerial engagement between the South Asian neighbours over the disputed region of Kashmir.

The incident was the latest in a dangerous sequence of events between the two countries that have sent tensions rocketing, as major world powers including China, the US and the UN urged restraint.

It sparked fears of India and Pakistan -- who have fought two wars and countless deadly skirmishes over Kashmir -- entering a cycle of retaliation and counterattacks that could spiral out of control.

Abhinandan, who rapidly attained hero status in his own country, has become the face of the escalating conflict, with analysts touting him as a potential trump card for Islamabad and perhaps the key to bringing the arch-rivals back from the brink.

Earlier Thursday Faisal told reporters that the pilot "is with us, he is safe and in good condition".

A viral video purports to show Abhinandan being dragged and beaten by what appears to be a group of men as Pakistani soldiers intervene, shouting "Stop! Stop!"

Faisal admitted he had "some mishap before our officers reached there because he was caught by the public", but stressed his well-being.

"We will decide in a day or two whether he will be given the status of POW or else," he added.

But it was a later video released by the Pakistani military which showed the pilot sipping tea, his face swollen and sporting bruises but otherwise collected and calm, that was most seized upon in both India and Pakistan.

In it, he thanks the "thorough gentlemen" who rescued him from the mob and compliments the tea as "fantastic".

It was unclear if he had been coerced to speak.

The video was aired widely on Pakistani television channels, but none of the footage was broadcast in India.

What happens to him next could prove central to de-escalating one of the most serious confrontations between the rival neighbours in decades, analysts say.

Any mistreatment of him could create huge anger in India and send tensions soaring once more -- but his safe release could "aid peace", a retired Indian general told AFP.