I got the answer.
Problem was eclipse was not detecting framework code as application.
So i was not able to add framework code from "add->project" option.
What i have done now is, i added any dummy androidManifest.xml in policy
folder(eclipse detects only manifest file, not mk file, it seems).
So eclipse started to detect it as an application.
Now i started debug configurations
and gave id of system_process
and press debug and set the breakpoint.
it worked.