I get your point,but you see,the mistake is very basic,that is to consider the militancy issue as war.I am not in favour of giving these militants who throw grenades in open market places the respect of being called a warriors.
They are called terrorists, not warriors. And they now inhabit unmarked graves.
I'm sure that only people who haven't been caught for such serious crimes will be rehabilitated. I don't know how the policy works in detail, but I'm pretty sure that a person who did such an act wouldn't be the recipient of the famous Indian generosity.
There are many youngsters (some in their teens) who, due to grinding poverty and propaganda, attended training camps by militants in Indian or Pakistan administered Kashmir. If they later had a change of heart, did not commit any serious offence, surrendered to Indian forces, and co-operated with them fully, they should be rehabilitated.