Responding to “Michhami Dukkadam” can be a meaningful gesture that respects the Jain tradition. You’re spot on; this phrase is about seeking forgiveness for any harm done, intentionally or unintentionally, during the year. The simplest and traditional way to respond is indeed saying “Michhami Dukkadam” back. It reflects reciprocation of the forgiveness sentiment, indicating your open heartedness to forgive and request forgiveness in return.
Using “Khamat Khamna” is also appropriate; it’s another phrase signifying the same essence of seeking pardon. It’s like saying, “Please forgive my faults” in a more colloquial manner. Saying, “I forgive you” captures the spirit as well, but it might not fully convey mutual seeking of forgiveness which is at the core of the tradition.
As for including wishes for spiritual growth and peace, that’s totally okay. In fact, it enriches the interaction, reflecting genuine respect not just for the words, but the deeper Jain philosophy itself — promoting peace and tolerance. I think someone might appreciate it if you add something like, “May we continue to grow and support each other.”
In terms of personal practice, some might vary their responses based on closeness. With family or close friends, it might get more specific or personal. But as an outsider respecting the culture, maintaining a little sincerity rather than complicating it with too many different elements tends to be appreciated.
So you’re safe with either of these responses. It’s more about the intention behind the words, than what exactly is said. I’m sure your friend will appreciate your effort to engage genuinely with this beautiful tradition.