IMAGE_FSTYPES = "tar.xz ext3 ???-sdimg"

Can the above be use in local.config to create image for the sd card?

IMAGE_FSTYPES = “tar.xz ext3 rpi-sdimg” this is for the raspbian.

I need to create installation image with the sd card.

what hardware platform are you using?

ConnectCore 6+

the sdcard image is generated during Yocto build of the site without making any changes to the configuration.
Here are the images from normal build:
look for files with .sdcard extension