After a lot of wild gueses at last I am somwhat able to find out two ways to do it.\
1) Author a .mxd in ArcMap with the layers in it and geodatabase added. Open this map in my custom application. Then create a feature in the geodatabase (but does not store) with proper field values, and then get the symbol for feature from feature renderer of the layer. Then I use the symbol to render on map in onafterdraw function. But always the default symbol is drawn no matters whatever value is st to "symbolname" field.
Im sure storing the feature in geodatabase should render it automatically by logic. But some how, it is not working and the application is crashing when trying to open a map with data in the geodatabase.
2) In the second way I was more successfull, by using uniquevaluerenderer interface of the layer. By using this I was able to get proper symbol.
Well after going through this, I think the feature template does not define the modifier symbols like mobility etc. I kind of miss the old MOLE extension.
Does anyone has more complete feature template. It would save me a lot of nights.