diff --git a/common/utils/indexpool.py b/common/utils/indexpool.py
new file mode 100644
index 0000000..24f57ff
--- /dev/null
+++ b/common/utils/indexpool.py
@@ -0,0 +1,36 @@
+from bitstring import BitArray
+import structlog
+
+log = structlog.get_logger()
+
+class IndexPool(object):
+    def __init__(self, max_entries, offset):
+        self.max_entries = max_entries
+        self.offset = offset
+        self.indices = BitArray(self.max_entries)
+
+    def get_next(self):
+        try:
+            _pos = self.indices.find('0b0')
+            self.indices.set(1, _pos)
+            return self.offset + _pos[0]
+        except IndexError:
+            log.info("exception-fail-to-allocate-id-all-bits-in-use")
+            return None
+
+    def release(self, index):
+        index -= self.offset
+        _pos = (index,)
+        try:
+            self.indices.set(0, _pos)
+        except IndexError:
+            log.info("bit-position-{}-out-of-range".format(index))
+
+    #index or multiple indices to set all of them to 1 - need to be a tuple
+    def pre_allocate(self, index):
+        if(isinstance(index, tuple)):
+            _lst = list(index)
+            for i in range(len(_lst)):
+                _lst[i] -= self.offset
+            index = tuple(_lst)
+            self.indices.set(1, index)
diff --git a/requirements.txt b/requirements.txt
index d62ddd5..99c94b2 100755
--- a/requirements.txt
+++ b/requirements.txt
@@ -1,5 +1,6 @@
 argparse==1.2.1
 arrow>=0.10.0
+bitstring
 cmd2==0.7.0
 colorama>=0.2.5
 cython==0.24.1
diff --git a/tests/utests/common/utils/test_indexpool.py b/tests/utests/common/utils/test_indexpool.py
new file mode 100644
index 0000000..609ed2f
--- /dev/null
+++ b/tests/utests/common/utils/test_indexpool.py
@@ -0,0 +1,35 @@
+from unittest import TestCase, main
+from common.utils.indexpool import IndexPool
+
+class TestIndexPool(TestCase):
+    pool = IndexPool(8, 0)
+    def test_01_get_next(self):
+        self.assertEqual(self.pool.indices.bin, '00000000')
+        for i in range(8):
+            self.assertEqual(self.pool.get_next(), i)
+        #to check if there's any bit left after using all 8 bits
+        self.assertIsNone(self.pool.get_next())
+
+    def test_02_pre_allocate(self):
+        _pool2 = IndexPool(8, 0)
+        self.assertEqual(_pool2.indices.bin, '00000000')
+        _pool2.pre_allocate((0,1,2,))
+        self.assertEqual(_pool2.indices.bin, '11100000')
+
+    def test_03_release(self):
+        self.pool.release(5)
+        self.assertEqual(self.pool.indices.bin, '11111011')
+        self.pool.release(10)
+        self.assertEqual(self.pool.indices.bin, '11111011')
+        self.pool.release(0)
+        self.assertEqual(self.pool.indices.bin, '01111011')
+
+    def test_04_check_offset(self):
+        _offset = 5
+        self.pool = IndexPool(8, _offset)
+        for i in range(8):
+            self.assertEqual(self.pool.get_next(), _offset + i)
+
+
+if __name__ == '__main__':
+    main()
\ No newline at end of file
diff --git a/voltha/core/xpon_handler.py b/voltha/core/xpon_handler.py
index 0bcd323..17408e9 100644
--- a/voltha/core/xpon_handler.py
+++ b/voltha/core/xpon_handler.py
@@ -32,6 +32,8 @@
 from voltha.protos.device_pb2 import Device
 from voltha.protos.common_pb2 import AdminState
 
+from common.utils.indexpool import IndexPool
+
 from requests.api import request
 
 log = structlog.get_logger()
@@ -41,6 +43,19 @@
     def __init__(self, core):
         self.core = core
         self.root = None
+        '''
+        Pool for handling channel group indices
+        @TODO: As per current persistency & HA design, each VOLTHA instance
+            maintains a separate independent database. Since channel-groups are
+            broadcast to all the VOLTHA instances in the cluster, the
+            xpon_handler in each instance will independently try to allocate a
+            unique index. This approach works OK for XGS-PON since CG<->CTerm
+            relationship is 1:1 for XGS-PON(Since a device can only be served
+            by one VOLTHA instance and thereby CTerm). This needs to be further
+            investigated wrt persistency & HA design evolution, for a better
+            approach in future.
+        '''
+        self.cg_pool = IndexPool(2**12, 0)
 
     def start(self, root):
         log.debug('starting xpon_handler')
@@ -51,6 +66,13 @@
         items = self.root.get('/channel_groups')
         return AllChannelgroupConfig(channelgroup_config=items)
 
+    def get_channel_group_config(self, request, context):
+        log.info('grpc-request', request=request)
+        item = self.root.get('/channel_groups/{}'.format(request.name))
+        if(isinstance(item, ChannelgroupConfig)):
+            return item
+        return Empty()
+
     def create_channel_group(self, request, context):
         log.info('grpc-request', request=request)
 
@@ -58,10 +80,16 @@
             assert isinstance(request, ChannelgroupConfig)
             assert self.validate_interface(request, context)
             log.debug('creating-channel-group', name=request.name)
+            _id = self.cg_pool.get_next()
+            assert _id != None
+            request.cg_index = _id
             self.root.add('/channel_groups', request)
 
             return Empty()
         except AssertionError, e:
+            context.set_details(
+                'Fail to allocate id to \'{}\''.format(request.name))
+            context.set_code(StatusCode.INVALID_ARGUMENT)
             return Empty()
         except ValueError:
             context.set_details(
@@ -82,7 +110,10 @@
         try:
             assert isinstance(request, ChannelgroupConfig)
             assert self.validate_interface(request, context)
+            channelgroup = self.get_channel_group_config(request, context)
+            assert channelgroup.name == request.name
 
+            request.cg_index = channelgroup.cg_index
             path = '/channel_groups/{}'.format(request.name)
             log.debug('updating-channel-group', name=request.name)
             self.root.update(path, request, strict=True)
@@ -118,9 +149,13 @@
             assert request.name not in known_channel_group_ref
             reference = "channel pair"
             assert request.name not in known_channel_group_ref_1
+            channelgroup = self.get_channel_group_config(request, context)
+            assert channelgroup.name == request.name
+
             path = '/channel_groups/{}'.format(request.name)
             log.debug('removing-channel-group', name=request.name)
             self.root.remove(path)
+	    self.cg_pool.release(channelgroup.cg_index)
 
             return Empty()
 
diff --git a/voltha/protos/bbf_fiber_base.proto b/voltha/protos/bbf_fiber_base.proto
index 0534e12..b7f7689 100644
--- a/voltha/protos/bbf_fiber_base.proto
+++ b/voltha/protos/bbf_fiber_base.proto
@@ -22,6 +22,7 @@
     ietf_interfaces.Interface interface = 2;
     ChannelgroupConfigData data = 3;
     string name = 4;
+    uint32 cg_index = 5 [(voltha.access) = READ_ONLY];
 }
 
 message ChannelpartitionConfig