Hello, we are a family of four with a 2-year-old. I’m looking for a sub-4-metre SUV that delivers a comfortable, confident ride in both city and on the highway. My usage is about 60% city (Bengaluru traffic) and 40% highway, roughly 1,000 km/month. My budget is ₹10–12 lakh on-road (Bengaluru). I’ve shortlisted the Hyundai Venue HX5 Turbo MT and the Mahindra XUV 3XO AX5. We already own an i10 Nios, so I trust Hyundai for trouble-free ownership, but I have reservations about the 3XO. Which should I choose?

Both are among the best compact SUVs on the market, and you wouldn't go wrong with either. The XUV 3XO is more comfortable and more engaging to drive, with more space in the back seat. 
However, since your use is 60 per cent in Bengaluru city traffic, the lighter, smoother Hyundai Venue powertrain might suit you better, and in the other areas, it's not too far behind the XUV either. 
And if you're happy and familiar with the Hyundai car ecosystem, it's best to stick with them; there may be some loyalty benefits from your dealer at the time of purchase as well.