I was finally able to see the extension commands after setting up "Development Signing" instead of "Run Locally". It is documented absolutely nowhere just like how I had to change the XcodeKit.framework to Embed without signing.

Is there any update in this?

Unfortunately this does not work. I still am not able to see the extension in the orange debuggable instance of xcode. Xcode 16.0 macOS 15.3.2