diff --git a/src/vnsw/agent/pkt/pkt_flow_info.cc b/src/vnsw/agent/pkt/pkt_flow_info.cc
index 94e3da9f17f..d6b185619ac 100644
--- a/src/vnsw/agent/pkt/pkt_flow_info.cc
+++ b/src/vnsw/agent/pkt/pkt_flow_info.cc
@@ -258,7 +258,20 @@ static bool NhDecode(const NextHop *nh, const PktInfo *pkt, PktFlowInfo *info,
                 const InetUnicastRouteEntry *rt =
                     static_cast<const InetUnicastRouteEntry *>(in->rt_);
                 if (rt != NULL && rt->GetLocalNextHop()) {
-                    out->nh_ = GetPolicyEnabledNH(rt->GetLocalNextHop())->id();
+                    const NextHop *local_nh = rt->GetLocalNextHop();
+                    out->nh_ = local_nh->id();
+                    if (local_nh->GetType() == NextHop::INTERFACE) {
+                        const Interface *local_intf =
+                            static_cast<const InterfaceNH*>(local_nh)->GetInterface();
+                        //Get policy enabled nexthop only for
+                        //vm interface, in case of vgw or service interface in
+                        //transparent mode we should still
+                        //use policy disabled interface
+                        if (local_intf &&
+                            local_intf->type() == Interface::VM_INTERFACE) {
+                            out->nh_ = GetPolicyEnabledNH(local_nh)->id();
+                        }
+                    }
                 } else {
                     out->nh_ = in->nh_;
                 }
diff --git a/src/vnsw/agent/pkt/test/test_ecmp.cc b/src/vnsw/agent/pkt/test/test_ecmp.cc
index aa5a084e888..5b9d96febe3 100644
--- a/src/vnsw/agent/pkt/test/test_ecmp.cc
+++ b/src/vnsw/agent/pkt/test/test_ecmp.cc
@@ -2263,6 +2263,67 @@ TEST_F(EcmpTest, TrapFlag) {
     client->WaitForIdle();
 }
 
+//Send a packet from vgw to ecmp destination
+TEST_F(EcmpTest, VgwFlag) {
+    Agent *agent = Agent::GetInstance();
+    InetInterface::CreateReq(agent->interface_table(), "vgw1",
+                            InetInterface::SIMPLE_GATEWAY, "vrf2",
+                            Ip4Address(0), 0, Ip4Address(0), Agent::NullString(),
+                            "");
+    client->WaitForIdle();
+
+    InetInterfaceKey *intf_key = new InetInterfaceKey("vgw1");
+    std::auto_ptr<const NextHopKey> nh_key(new InterfaceNHKey(intf_key, false,
+                                                              InterfaceNHFlags::INET4));
+
+    Ip4Address remote_server_ip1 = Ip4Address::from_string("10.10.10.100");
+    ComponentNHKeyPtr nh_data1(new ComponentNHKey(16, nh_key));
+    ComponentNHKeyPtr nh_data2(new ComponentNHKey(20, agent->fabric_vrf_name(),
+                                                  agent->router_id(),
+                                                  remote_server_ip1,
+                                                  false,
+                                                  TunnelType::DefaultType()));
+    Ip4Address ip = Ip4Address::from_string("0.0.0.0");
+    ComponentNHKeyList comp_nh_list;
+    comp_nh_list.push_back(nh_data1);
+    comp_nh_list.push_back(nh_data2);
+    EcmpTunnelRouteAdd(bgp_peer, "vrf2", ip, 0,
+                       comp_nh_list, false, "vn2",
+                       SecurityGroupList(), PathPreference());
+    client->WaitForIdle();
+
+    InetInterfaceKey tmp_key("vgw1");
+    Interface *intf =
+       static_cast<Interface *>(agent->interface_table()->
+           FindActiveEntry(&tmp_key));
+
+    //Send packet on vgw interface
+    TxIpPacket(intf->id(), "100.1.1.1", "2.2.2.2", 1);
+    client->WaitForIdle();
+
+    FlowEntry *entry;
+    FlowEntry *rev_entry;
+    entry = FlowGet(VrfGet("vrf2")->vrf_id(),
+                    "2.2.2.2", "100.1.1.1", 1, 0, 0, intf->flow_key_nh()->id());
+    EXPECT_TRUE(entry != NULL);
+    EXPECT_TRUE(entry->data().component_nh_idx  ==
+                CompositeNH::kInvalidComponentNHIdx);
+
+    rev_entry = FlowGet(VrfGet("vrf2")->vrf_id(),
+                       "100.1.1.1", "2.2.2.2", 1, 0, 0, intf->flow_key_nh()->id());
+    EXPECT_TRUE(rev_entry != NULL);
+    EXPECT_TRUE(rev_entry->data().component_nh_idx ==
+                CompositeNH::kInvalidComponentNHIdx);
+
+    client->WaitForIdle();
+    agent->fabric_inet4_unicast_table()->DeleteReq(bgp_peer, "vrf2",
+                                                   ip, 0, NULL);
+    InetInterface::DeleteReq(agent->interface_table(), "vgw1");
+    client->WaitForIdle();
+    WAIT_FOR(1000, 1000, (Agent::GetInstance()->pkt()->
+                flow_table()->Size() == 0));
+}
+
 int main(int argc, char *argv[]) {
     GETUSERARGS();
     client = TestInit(init_file, ksync_init, true, true, true, 100*1000);