Hi rag,
assume you have development component named as testone and another development component as testtwo now testone is external dc to testtwo and vice versa.
what is your webdynpro application is of type Development component or normal webdynpro project ...
you can google fore development compnents in webdynpro java, etc you will find more websites from sap , that explain in much detail.
Regards
Govardan Raj