Hello Rajesh,
Make sure you have installed all of the updates and have installed the SDK. The SDK does not come with the base S32 Design Studio for ARM installation. If you install the latest update, S32 Design Studio for ARM 2018.R1 - Update 6 available , then you'll have everything you need.
Then, when you create your new application project using the wizard, you should have options similar to this for toolchain:

I have IAR EW 8.1, the options listed may vary depending upon which version of IAR you have. Please see the release notes (ex. C:\NXP\S32DS_ARM_v2018.R1\S32DS\S32SDK_S32K14x_RTM_2.0.0\ReleaseNotes.pdf) for more details.
Then, when you will see some options, depending on which IAR Toolchain for ARM version you chose.
For legacy, 7.x:

For 8.x:

Hope it helps,
Mike