I went to the libGDX website and downloaded the gdx-setup.jar file. I opened it, configured it and clicked generate. It generated the gradle project successfully. I then went to Android Studio -> Open an existing project -> pointed to the new libgdx gradle project. It is stuck at "Building 'gdxgame' Gradle project info"
I let it run for over an hour with no results. I checked task manager and CPU usage is 0% for the process AndroidStudio.
I had API 22 and 23. I then decided to get the recommended version "20" along with build tools version 20. gdx-setup failed to generate in any configuration except the following:
Build-Tools - Latest in system (23)
API-version - 20
So, whats messed up? I have the latest version of Android Studio (1.3.2 build 141.2178183)
I realized that I was supposed to point to "build.gradle" file for importing. I was choosing the directory and it got stuck. Now it works. Thanks to noone for pointing that out.