1. Went to Settings -> General -> Network -> EDGE and changed the APN to airtelfun.com from 22.214.171.124
2. Restarted the phone, ran the field test, and voila! I had an IP address: 10.149.x.x (kept changing every few minutes).
3. Edited the proxy.pac file to reflect the correct IP address (10.0.0.0), uploaded it, and done!!
But there's still a problem: I can do maps, stocks, weather and youtube. But Safari doesn't seem to like my GPRS settings. Whenever I try to go to google.com or yahoo.com, it gets redirected to www.google.co.in/m or m.yahoo.co.in, and then Safari throws the message "Safari can't download this type of file". Browsing other sites works at times....but Safari keeps throwing me out to the Springboard with clockwork regularity. BTW, I ran the network speed test, and the result came to 75 kbps....