diff --git a/dp-core/vr_datapath.c b/dp-core/vr_datapath.c
index a78ffc599..9593d1b85 100644
--- a/dp-core/vr_datapath.c
+++ b/dp-core/vr_datapath.c
@@ -102,23 +102,26 @@ vr_get_proxy_mac(struct vr_packet *pkt, struct vr_forwarding_md *fmd,
         }
 
         /*
-         * if nh is not of ENCAP type, that means that the vm is not hosted by
-         * us or the request is for a host in vcp port. if the request is for
-         * a host in the vcp port, we should proxy. else, we should proxy only
-         * if
-         * i am a TSN, i have the mac information and the originator is a bare
-         * metal
+         * we should proxy if the vm is hosted by us, in which case nh will be
+         * of ENCAP type. we should also proxy for a host in vcp port. In all
+         * other cases, we should proxy only if
+         *
+         * i am a TSN(fmd->fmd_src),
+         * i amd the dns IP or
+         * i have the mac information (nh - (mostly tunnel)) and
+         * the originator is a bare metal (fmd->fmd_src)
          */
-        if (!to_vcp && nh && nh->nh_type != NH_ENCAP) {
-            if (fmd->fmd_src != TOR_SOURCE) {
-                if (stats)
-                    stats->vrf_arp_physical_flood++;
-                return MR_FLOOD;
-            }
+        if (to_vcp || to_gateway ||
+                ((nh) &&
+                 ((nh->nh_type == NH_ENCAP) ||
+                  (fmd->fmd_src == TOR_SOURCE)))) {
+            if (stats)
+                stats->vrf_arp_physical_stitch++;
+        } else {
+            if (stats)
+                stats->vrf_arp_physical_flood++;
+            return MR_FLOOD;
         }
-
-        if (stats)
-            stats->vrf_arp_physical_stitch++;
     } else {
         /*
          * if there is no stitching information, but flood flag is set
diff --git a/dp-core/vr_interface.c b/dp-core/vr_interface.c
index e33714169..68f58fba2 100644
--- a/dp-core/vr_interface.c
+++ b/dp-core/vr_interface.c
@@ -86,7 +86,8 @@ vif_drop_pkt(struct vr_interface *vif, struct vr_packet *pkt, bool input)
  */
 static unsigned char *
 vif_cmn_rewrite(struct vr_interface *vif, struct vr_packet *pkt,
-        unsigned char *rewrite, unsigned short len)
+        struct vr_forwarding_md *fmd, unsigned char *rewrite,
+        unsigned short len)
 {
     unsigned char *head;
 
@@ -232,7 +233,8 @@ vif_xconnect(struct vr_interface *vif, struct vr_packet *pkt,
 
 static unsigned char *
 agent_set_rewrite(struct vr_interface *vif, struct vr_packet *pkt,
-        unsigned char *rewrite, unsigned short len)
+        struct vr_forwarding_md *fmd, unsigned char *rewrite,
+        unsigned short len)
 {
     unsigned char *head;
     unsigned int hdr_len;
@@ -256,7 +258,7 @@ agent_set_rewrite(struct vr_interface *vif, struct vr_packet *pkt,
 
     hdr = (struct agent_hdr *)(head + len);
     hdr->hdr_ifindex = htons(pkt->vp_if->vif_idx);
-    hdr->hdr_vrf = htons(pkt->vp_if->vif_vrf);
+    hdr->hdr_vrf = htons(fmd->fmd_dvrf);
     /* this needs some thought */
     hdr->hdr_cmd = htons(AGENT_TRAP_NEXTHOP);
     hdr->hdr_cmd_param = 0;
@@ -948,7 +950,8 @@ tun_rx(struct vr_interface *vif, struct vr_packet *pkt,
 
 static unsigned char *
 eth_set_rewrite(struct vr_interface *vif, struct vr_packet *pkt,
-        unsigned char *rewrite, unsigned short len)
+        struct vr_forwarding_md *fmd, unsigned char *rewrite,
+        unsigned short len)
 {
     if (!len)
         return pkt_data(pkt);
@@ -958,7 +961,7 @@ eth_set_rewrite(struct vr_interface *vif, struct vr_packet *pkt,
         return pkt_data(pkt);
     }
 
-    return vif_cmn_rewrite(vif, pkt, rewrite, len);
+    return vif_cmn_rewrite(vif, pkt, fmd, rewrite, len);
 }
 
 static mac_response_t
diff --git a/dp-core/vr_mirror.c b/dp-core/vr_mirror.c
index 70325024f..6f9809081 100644
--- a/dp-core/vr_mirror.c
+++ b/dp-core/vr_mirror.c
@@ -417,7 +417,7 @@ vr_mirror(struct vrouter *router, uint8_t mirror_id,
                     pkt_nh->nh_encap_len))
                 goto fail;
 
-            if (!pkt_nh->nh_dev->vif_set_rewrite(pkt_nh->nh_dev, pkt,
+            if (!pkt_nh->nh_dev->vif_set_rewrite(pkt_nh->nh_dev, pkt, fmd,
                     pkt_nh->nh_data, pkt_nh->nh_encap_len))
                 goto fail;
         }
diff --git a/dp-core/vr_nexthop.c b/dp-core/vr_nexthop.c
index e22702aa1..3f5518d2e 100644
--- a/dp-core/vr_nexthop.c
+++ b/dp-core/vr_nexthop.c
@@ -1290,8 +1290,8 @@ nh_vxlan_tunnel(struct vr_packet *pkt, struct vr_nexthop *nh,
 
     /* slap l2 header */
     vif = nh->nh_dev;
-    if (!vif->vif_set_rewrite(vif, pkt, nh->nh_data,
-                                     nh->nh_udp_tun_encap_len)) {
+    if (!vif->vif_set_rewrite(vif, pkt, fmd,
+                nh->nh_data, nh->nh_udp_tun_encap_len)) {
         goto send_fail;
     }
 
@@ -1426,8 +1426,8 @@ nh_mpls_udp_tunnel(struct vr_packet *pkt, struct vr_nexthop *nh,
 
     /* slap l2 header */
     vif = nh->nh_dev;
-    tun_encap = vif->vif_set_rewrite(vif, pkt, nh->nh_data,
-                                     tun_encap_len);
+    tun_encap = vif->vif_set_rewrite(vif, pkt, fmd,
+            nh->nh_data, tun_encap_len);
     if (!tun_encap) {
         goto send_fail;
     }
@@ -1584,8 +1584,8 @@ nh_gre_tunnel(struct vr_packet *pkt, struct vr_nexthop *nh,
 
     /* slap l2 header */
     vif = nh->nh_dev;
-    tun_encap = vif->vif_set_rewrite(vif, pkt, nh->nh_data,
-            nh->nh_gre_tun_encap_len);
+    tun_encap = vif->vif_set_rewrite(vif, pkt, fmd,
+            nh->nh_data, nh->nh_gre_tun_encap_len);
     if (!tun_encap) {
         drop_reason = VP_DROP_PUSH;
         goto send_fail;
@@ -1746,7 +1746,7 @@ nh_encap_l3(struct vr_packet *pkt, struct vr_nexthop *nh,
             return 0;
     }
 
-    if (!vif->vif_set_rewrite(vif, pkt, nh->nh_data, nh->nh_encap_len)) {
+    if (!vif->vif_set_rewrite(vif, pkt, fmd, nh->nh_data, nh->nh_encap_len)) {
         vr_pfree(pkt, VP_DROP_REWRITE_FAIL);
         return 0;
     }
diff --git a/include/vr_interface.h b/include/vr_interface.h
index 63fa181f2..af8efae5c 100644
--- a/include/vr_interface.h
+++ b/include/vr_interface.h
@@ -171,7 +171,7 @@ struct vr_interface {
     void *vif_os;
     int (*vif_send)(struct vr_interface *, struct vr_packet *, void *);
     unsigned char *(*vif_set_rewrite)(struct vr_interface *, struct vr_packet *,
-            unsigned char *, unsigned short);
+            struct vr_forwarding_md *, unsigned char *, unsigned short);
     int (*vif_tx)(struct vr_interface *, struct vr_packet *,
             struct vr_forwarding_md *);
     /*