Lavanya,
There're many factors to consider in order to decide what the right way for upgrade is. You can use XPSExport/Import as the primary method (fed objects being part of the policy store objects), but should take precautionary steps, such as backing up your R12.52 policy store, etc. Please review the Upgrade sections of the documentation, decide your migration strategy, prep for 64-bit, etc.
Upgrading - CA Single Sign-On - 12.7 - CA Technologies Documentation
Regards. - Vijay