IPhone hardware failure in 1 yr 2 months! Can anything be done for replacement?

I had purchased an iPhone 5 in Nov 2012 here in India (Bangalore) for ~ Rs 45,000.
However for the past few months it started crashing mysteriously. For the last few days the frequency of crash increased to 20-30 times a day (from the previous 2-3 times a week). Recently after a crash, it rebooted upto the "Recovery Mode" screen only.
I tried with the latest iTunes to do recovery but it always failed at the _end_ of writing the new software. I even tried the DFU mode, but that too fails right at the end of writing the new software. Sometimes it gave error 12 and sometimes error 9. I've tried different USB cables just to make sure there was no problem there but to no avail!
I then showed it to the Apple service center folks here (service is provided by an Apple authorised service unit - Ample) but they too were unable to fix it. They said it was a "rare" internal hardware failure. They are asking me to cough up Rs 21,000 for a replacement unit!
It's barely 2 months out of the warrannty period when the dam phone crashed. This is real poor quality of service from Apple. Is there anything I can do to get my unit replaced? Is there an escalation I can do to get someone's attention in fixing my issue?
TIA for any tips.

For the first part, that does beg the question whether this is something that is more of a problem with iCloud than it is other providers, for whatever reason.
I'm not a huge fan of anecdotal "evidence" in general, but iCloud mail does seem to have the worst reputation for missing messages when compared to Gmail or even Outlook.com, at least going by a quick search. For other iCloud mail users, does this ever concern you? Any former iCloud users who left for similar reasons?

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