You can use the Create 3D command to create a 3D model with Product Manufacturing Information (PMI) in a part, sheet metal, or assembly document from 2D drawing geometry and manufacturing dimensions in a draft document. You also can use the Create 3D command to update an existing model with sketches and manufacturing dimensions.
For more details please refer to Solid Edge help for 'Create 3D' command.
I have figured it out.
The geometry has to be an actual sketch, I was trying it from a draft image which is why i couldn't select anything.