The AVD manager is not starting the emulator, whenever tried starting the emulator it shows the below error in screenshot
I was able to find solution after searching for a while on the internet and posting the answer here so that anyone else facing the same issue could find it easily.
Apple M1 chip has a 64 bit ARM architecture also known as AArch64, so it requires the emulator setup in the following way
When you create a new virtual device select the options shown in the screenshot
Remember to select the Other images tab and under that verify the ABI is arm64-v8a, then only the emulator will get started.