Answered by e-mail, but for the benefit of others who may find the information useful, here is my response...
Hi Vinesh,
If you choose to work by hand, you've little chance of removing the defects properly because Audi/VW paint is very hard and thus difficult to work. Therefore, often the best bet when working by hand is to use a glaze like Menzerna Finishing Touch Glaze or Poorboys Black Hole to fill and hide the defects, and then seal the finish with a decent wax or sealant (to boost the gloss and lock in the fillers). This type of approach can be quite effective and is worth pursuing if you do not wish to go down the route of using abrasive polishes and a dual action machine polisher. Note that Poorboys Polish with Carnauba also has some filling ability, and can be topped with further coats of wax, but Black Hole will hide more of the defects in your paint.
Poorboys Black Hole £10.95 -
http://www.polishedbliss.co.uk/acatalog/poorboys-black-hole-glaze-polish.html
German Applicator Pad £2.95 -
http://www.polishedbliss.co.uk/acatalog/lake-country-german-applicator-pad-polish.html
3 x Super Thick & Plush Towels £9.95 -
http://www.polishedbliss.co.uk/acatalog/poorboys-super-thick-and-plush-towel-polish.html
Alternatively, if you are happy to consider a proper dual action machine polisher, then you will be able to make much more headway in terms of paint correction. To fully correct swirls and other moderate defects (fine scratches and etching) on your car using a machine like the Meguiars G220, you will need to start out with Menzerna RD3.02 using Menzerna Polishing Pads (5.5" pads on a 5" flexible backing plate for larger areas, and 4" Lake Country CCS Light Cut Pads on a 3.5" flexible backing plate for more awkward areas). Working at speed 4-5 using moderate pressure should see you able to correct ~95% of the defects with a couple of attempts per panel. With the bulk of the correction done, you will need to switch to Menzerna 85RD again using Menzerna Polishing Pads (again, it's also worth having Lake Country CCS Polishing Spot Pads for tighter areas). Working at speed 4-5 with light pressure should see you produce the maximum possible gloss, which you will then want to seal in using either a wax or a sealant.
Here is a link to an illustrated forum guide to this method...
http://www.audi-sport.net/vb/showthread.php?t=50080
...and here are the basic products you would need...
Advanced G220 Kit £177.85 -
http://www.polishedbliss.co.uk/acatalog/meguiars-g220-dual-action-polishing-machine-polish.html (choosing 3 x Menzerna Polishing and 2 x Menzerna Compounding)
Menzerna RD3.02 £19.95 -
http://www.polishedbliss.co.uk/acatalog/menzerna-rd3-02-polish.html
Menzerna 85RD £16.85 -
http://www.polishedbliss.co.uk/acatalog/menzerna-85rd-polish.html
3 x Super Thick & Plush Towels £9.95 -
http://www.polishedbliss.co.uk/acatalog/poorboys-super-thick-and-plush-towel-polish.html
So there you have it - two ways to proceed, one by hand, one by machine, and both methods can be topped using your existing wax. I hope that helps, but if you have further questions, please feel free to fire away.
Cheers
Rich