On the KLM site I got the light fare without choice for my ams-hig ktm-ams trip, but when I do ams-ktm-ams as a dummy booking I get the option between light/standard/flex. This way you can still end up without luggage allowance but that way it is a choice.

However, KLM finally fixed it for me. After going back and forth a couple of timing I finally got someone on the phone who was able to change my ticket to standard (instead of light) for free and it shows up correctly on etihad website now as well.

Thanks for all the help! Kind of curious now what would have happened in KTM but guess I’ll never find out.