need to run emulator with proxy settings , I am using the following command in command prompt to start emulator
emulator -avd AVD_for_3_7_WVGA_Nexus_One -http-p
For some reason Android Emulator doesn't like IP address as the proxy. If you are using Fiddler use localhost:8888:
localhost:8888
emulator.exe -avd Nexus_5_API_21_x86 -no-audio -http-proxy localhost:8888
Don't forget -no-audio parameter too.
-no-audio