I am using adobe premiere pro cs6

I am running windows 8.1 (64 bit)

I am trying to cut a portion of duration 7min. 15s minutes from a big video. I am using h264 encoding for the final output as an mp4 file. The sad part is, I am choosing bitrate of 3mbps and still the quality is low (gets pixelated at some points and has low resolution) of the final output of video. The final video has 1920x1080 dimensions but the resolution i.e. the dpi seems to be low.

The source video has a bit rate of 1792 kbps and looks very sharp. What should I do so that my final video is crisp?

The official music videos and trailers on youtube have a very sharp quality and a low file size. I want the same settings for exporting my videos such that the quality is the highest and the file size is the lowest. I shoot videos from my phone camera. It makes a 7-8 minute video of 1GB file size. On the other hand, a very high quality youtube video of 720 p resolution of approximately 1 hour 15 minutes length has that file size.