Just spoke to a BLS agent and pressed him to check on this (he kept on saying you need surrender certificate) and then he did put me on hold and checked on it.. so apparently, 1 day back there is a new guideline from HCI.. one can apply for entry visa without surrender certificate i.e., you need to show the following in lieu of surrender certificate: a. application form and proof that you have submitted an application for it b. affidavit that it is an emergency situationIt seems the consulate has relaxed this requirement to allow people to apply for SC and visa at same time. As they used to allow for OCI a long time ago.
But, being a new development, there is little guidance on this.
The only caveat is that you can ONLY apply for a 3 month single entry visa (however the fee would be for the 6 month visa only).. in case you need visa for more than 3 months, you would need the surrender certificate..