diff --git a/apps/scalablegateway/src/main/java/org/onosproject/scalablegateway/impl/SelectGroupHandler.java b/apps/scalablegateway/src/main/java/org/onosproject/scalablegateway/impl/SelectGroupHandler.java
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+++ b/apps/scalablegateway/src/main/java/org/onosproject/scalablegateway/impl/SelectGroupHandler.java
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+/*
+ * Copyright 2016-present Open Networking Laboratory
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *     http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+package org.onosproject.scalablegateway.impl;
+
+import com.google.common.collect.Lists;
+import org.onlab.packet.Ip4Address;
+import org.onosproject.core.ApplicationId;
+import org.onosproject.net.DeviceId;
+import org.onosproject.net.Port;
+import org.onosproject.net.PortNumber;
+import org.onosproject.net.behaviour.ExtensionTreatmentResolver;
+import org.onosproject.net.device.DeviceService;
+import org.onosproject.net.driver.DefaultDriverData;
+import org.onosproject.net.driver.DefaultDriverHandler;
+import org.onosproject.net.driver.Driver;
+import org.onosproject.net.driver.DriverHandler;
+import org.onosproject.net.driver.DriverService;
+import org.onosproject.net.flow.DefaultTrafficTreatment;
+import org.onosproject.net.flow.TrafficTreatment;
+import org.onosproject.net.flow.instructions.ExtensionPropertyException;
+import org.onosproject.net.flow.instructions.ExtensionTreatment;
+import org.onosproject.net.flow.instructions.ExtensionTreatmentType;
+import org.onosproject.net.group.DefaultGroupDescription;
+import org.onosproject.net.group.DefaultGroupKey;
+import org.onosproject.net.group.Group;
+import org.onosproject.net.group.GroupBucket;
+import org.onosproject.net.group.GroupBuckets;
+import org.onosproject.net.group.GroupDescription;
+import org.onosproject.net.group.GroupKey;
+import org.onosproject.net.group.GroupService;
+import org.onosproject.scalablegateway.api.GatewayNode;
+import org.slf4j.Logger;
+import org.slf4j.LoggerFactory;
+
+import java.util.List;
+
+import static org.onosproject.net.group.DefaultGroupBucket.createSelectGroupBucket;
+
+/**
+ * Handles group generation request from ScalableGateway.
+ */
+public class SelectGroupHandler {
+
+    private final Logger log = LoggerFactory.getLogger(getClass());
+
+    private static final String TUNNEL_DESTINATION = "tunnelDst";
+    private static final String PORTNAME_PREFIX_TUNNEL = "vxlan";
+    private static final String PORTNAME = "portName";
+
+    private final GroupService groupService;
+    private final DeviceService deviceService;
+    private final DriverService driverService;
+    private final ApplicationId appId;
+
+    /**
+     * Default constructor.
+     *
+     * @param targetGroupService group service
+     * @param targetDeviceService device service
+     * @param targetDriverService driver service
+     * @param appId application id for group service
+     */
+    public SelectGroupHandler(GroupService targetGroupService, DeviceService targetDeviceService,
+                              DriverService targetDriverService, ApplicationId appId) {
+        groupService = targetGroupService;
+        deviceService = targetDeviceService;
+        driverService = targetDriverService;
+        this.appId = appId;
+    }
+
+    /**
+     * Creates select type group description according to given deviceId.
+     *
+     * @param srcDeviceId target device id for group description
+     * @param nodeList gateway node list for bucket action
+     * @return created select type group description
+     */
+    public GroupDescription createSelectGroupInVxlan(DeviceId srcDeviceId, List<GatewayNode> nodeList) {
+        List<GroupBucket> bucketList = generateBucketsForSelectGroup(srcDeviceId, nodeList);
+        GroupKey key = generateGroupKey(srcDeviceId, nodeList);
+        return new DefaultGroupDescription(srcDeviceId, GroupDescription.Type.SELECT,
+                new GroupBuckets(bucketList), key, null, appId);
+    }
+
+    private GroupKey generateGroupKey(DeviceId srcDeviceId, List<GatewayNode> nodeList) {
+        String cookie = srcDeviceId.toString();
+        for (GatewayNode node : nodeList) {
+            cookie = cookie.concat(node.getGatewayDeviceId().toString());
+        }
+        return new DefaultGroupKey(cookie.getBytes());
+
+    }
+
+    /**
+     * Updates groupBuckets in select type group.
+     *
+     * @param deviceId target device id for group description
+     * @param oldAppCookie group key for target group
+     * @param nodeList updated gateway node list for bucket action
+     * @param nodeInsertion update type(add or remove)
+     * @return result of process
+     */
+    public boolean updateBucketToSelectGroupInVxlan(DeviceId deviceId, GroupKey oldAppCookie,
+                                                    List<GatewayNode> nodeList, boolean nodeInsertion) {
+        List<GroupBucket> bucketList = generateBucketsForSelectGroup(deviceId, nodeList);
+
+        GroupKey newAppCookie = generateGroupKey(deviceId, nodeList);
+        if (nodeInsertion) {
+            groupService.addBucketsToGroup(deviceId, oldAppCookie,
+                    new GroupBuckets(bucketList), newAppCookie, appId);
+        } else {
+            groupService.removeBucketsFromGroup(deviceId, oldAppCookie,
+                    new GroupBuckets(bucketList), newAppCookie, appId);
+        }
+        Group group = groupService.getGroup(deviceId, newAppCookie);
+        return group != null ? true : false;
+    }
+
+    private List<GroupBucket> generateBucketsForSelectGroup(DeviceId deviceId, List<GatewayNode> nodeList) {
+        List<GroupBucket> bucketList = Lists.newArrayList();
+        nodeList.forEach(node -> {
+            TrafficTreatment tBuilder = DefaultTrafficTreatment.builder()
+                    .extension(buildNiciraExtenstion(deviceId, node.getDataIpAddress()), deviceId)
+                    .setOutput(getTunnelPort(deviceId))
+                    .build();
+            bucketList.add(createSelectGroupBucket(tBuilder));
+        });
+        return bucketList;
+    }
+
+    /**
+     * Builds Nicira extension for tagging remoteIp of vxlan.
+     *
+     * @param id device id of vxlan source device
+     * @param hostIp remote ip of vxlan destination device
+     * @return NiciraExtension Treatment
+     */
+    private ExtensionTreatment buildNiciraExtenstion(DeviceId id, Ip4Address hostIp) {
+        Driver driver = driverService.getDriver(id);
+        DriverHandler driverHandler = new DefaultDriverHandler(new DefaultDriverData(driver, id));
+        ExtensionTreatmentResolver resolver = driverHandler.behaviour(ExtensionTreatmentResolver.class);
+
+        ExtensionTreatment extensionInstruction =
+                resolver.getExtensionInstruction(
+                        ExtensionTreatmentType.ExtensionTreatmentTypes.NICIRA_SET_TUNNEL_DST.type());
+
+        try {
+            extensionInstruction.setPropertyValue(TUNNEL_DESTINATION, hostIp);
+        } catch (ExtensionPropertyException e) {
+            log.error("Error setting Nicira extension setting {}", e);
+        }
+
+        return extensionInstruction;
+    }
+
+    /**
+     * Returns port number of vxlan tunnel.
+     *
+     * @param deviceId target Device Id
+     * @return portNumber
+     */
+    private PortNumber getTunnelPort(DeviceId deviceId) {
+        Port port = deviceService.getPorts(deviceId).stream()
+                .filter(p -> p.annotations().value(PORTNAME).equals(PORTNAME_PREFIX_TUNNEL))
+                .findAny().orElse(null);
+
+        if (port == null) {
+            log.error("No TunnelPort was created.");
+            return null;
+        }
+        return port.number();
+
+    }
+}