I’m planning to buy a manual SUV under ₹14 lakh (on-road). My driving split is 70% city / 30% highway, with monthly running ≤ 1,200 km and a target city mileage of around 14 kmpl. Should I choose petrol or diesel for cost and long-term suitability? I’m confused between the Skoda Kylaq, Mahindra XUV 3XO, Kia Sonet, and new-gen Hyundai Venue. Also, is it better to buy a base model of an upper-segment SUV or a feature-loaded variant of a sub-4-m SUV for my needs?

From the cars you have shortlisted, none are likely to return 14kpl in the city from their turbo-petrol variants, unless there is very light traffic in your city. 

Hence, if mileage is a priority, go for their diesel versions. This rules out the petrol-only Skoda Kylaq. 

The new-gen Hyundai Venue is a big step up over the previous one, and you should definitely consider it. What's more is that Hyundai's 1.5-litre diesel engine is more efficient than the Mahindra XUV3XO. 

Coming to the second part of your question, it all boils down to personal preference. Whether you want the space and a larger car, or you want all the modern features, and you don't mind compromising on cabin room. Ideally, drive all the cars that fit into your budget, and pick the one that you like the best.