diff --git a/osm_policy_module/alarming/service.py b/osm_policy_module/alarming/service.py
index d1d1ea5..4b393e5 100644
--- a/osm_policy_module/alarming/service.py
+++ b/osm_policy_module/alarming/service.py
@@ -25,6 +25,8 @@
 import asyncio
 import json
 import logging
+import operator
+import functools
 
 import requests
 from requests.exceptions import ConnectionError, RequestException
@@ -195,12 +197,18 @@
         finally:
             database.db.close()
 
-    async def delete_vnf_alarms(self, nsr_id):
+    async def delete_vnf_alarms(self, nsr_id, vnf_member_index=None):
         log.info("Deleting vnf alarms for network service %s", nsr_id)
         database.db.connect()
         try:
             with database.db.atomic():
-                for alarm in VnfAlarmRepository.list(VnfAlarm.nsr_id == nsr_id):
+                if vnf_member_index is None:
+                    alarm_conditions = VnfAlarm.nsr_id == nsr_id
+                else:
+                    query_list = [VnfAlarm.nsr_id == nsr_id,
+                                  VnfAlarm.vnf_member_index == vnf_member_index]
+                    alarm_conditions = functools.reduce(operator.and_, query_list)
+                for alarm in VnfAlarmRepository.list(alarm_conditions):
                     log.debug("Deleting vnf alarm %s", alarm.alarm_uuid)
                     try:
                         await self.mon_client.delete_alarm(
diff --git a/osm_policy_module/autoscaling/service.py b/osm_policy_module/autoscaling/service.py
index a8c36e0..41731b4 100644
--- a/osm_policy_module/autoscaling/service.py
+++ b/osm_policy_module/autoscaling/service.py
@@ -26,6 +26,8 @@
 import datetime
 import json
 import logging
+import operator
+import functools
 
 from osm_policy_module.common.common_db_client import CommonDbClient
 from osm_policy_module.common.lcm_client import LcmClient
@@ -245,15 +247,19 @@
         finally:
             database.db.close()
 
-    async def delete_scaling_groups(self, nsr_id: str):
+    async def delete_scaling_groups(self, nsr_id: str, vnf_member_index=None):
         log.debug("Deleting scaling groups for network service %s", nsr_id)
         database.db.connect()
         try:
             with database.db.atomic() as tx:
                 try:
-                    for scaling_group in ScalingGroupRepository.list(
-                        ScalingGroup.nsr_id == nsr_id
-                    ):
+                    if vnf_member_index is None:
+                        scale_conditions = ScalingGroup.nsr_id == nsr_id
+                    else:
+                        query_list = [ScalingGroup.nsr_id == nsr_id,
+                                      ScalingGroup.vnf_member_index == vnf_member_index]
+                        scale_conditions = functools.reduce(operator.and_, query_list)
+                    for scaling_group in ScalingGroupRepository.list(scale_conditions):
                         for scaling_policy in scaling_group.scaling_policies:
                             for scaling_criteria in scaling_policy.scaling_criterias:
                                 for alarm in scaling_criteria.scaling_alarms:
diff --git a/osm_policy_module/core/agent.py b/osm_policy_module/core/agent.py
index 95cc830..a73cd5b 100644
--- a/osm_policy_module/core/agent.py
+++ b/osm_policy_module/core/agent.py
@@ -36,7 +36,7 @@
 
 log = logging.getLogger(__name__)
 
-ALLOWED_KAFKA_KEYS = ["instantiated", "scaled", "terminated", "notify_alarm"]
+ALLOWED_KAFKA_KEYS = ["instantiated", "scaled", "terminated", "notify_alarm", "vnf_terminated"]
 
 
 class PolicyModuleAgent:
@@ -78,6 +78,9 @@
 
                 if key == "notify_alarm":
                     await self._handle_alarm_notification(msg)
+
+                if key == "vnf_terminated":
+                    await self._handle_vnf_terminated(msg)
             else:
                 log.debug("Key %s is not in ALLOWED_KAFKA_KEYS", key)
         except peewee.PeeweeException:
@@ -151,3 +154,21 @@
                 "Current state is %s. Skipping...",
                 content["operationState"],
             )
+
+    async def _handle_vnf_terminated(self, content):
+        nsr_id = content['nsr_id']
+        vnf_member_index = content['vnf_member_index']
+        if (
+            content["operationState"] == "COMPLETED"
+            or content["operationState"] == "PARTIALLY_COMPLETED"
+        ):
+            log.info(
+                "Deleting policies of VNF with nsr_id: %s and vnf-member-index: %s"
+                % (nsr_id, vnf_member_index))
+            await self.autoscaling_service.delete_scaling_groups(nsr_id, vnf_member_index)
+            await self.alarming_service.delete_vnf_alarms(nsr_id, vnf_member_index)
+        else:
+            log.info(
+                "Network service is not in COMPLETED or PARTIALLY_COMPLETED state. "
+                "Current state is %s. Skipping...",
+                content['operationState'])
diff --git a/osm_policy_module/tests/unit/core/test_policy_agent.py b/osm_policy_module/tests/unit/core/test_policy_agent.py
index 77c285d..f9f78cc 100644
--- a/osm_policy_module/tests/unit/core/test_policy_agent.py
+++ b/osm_policy_module/tests/unit/core/test_policy_agent.py
@@ -136,6 +136,54 @@
         autoscaling_handle_alarm.assert_called_with("test_alarm_uuid", "alarm")
         alarming_handle_alarm.assert_called_with("test_alarm_uuid", "alarm", content)
 
+    @mock.patch.object(CommonDbClient, "__init__", lambda *args, **kwargs: None)
+    @mock.patch("osm_policy_module.alarming.service.MonClient")
+    @mock.patch("osm_policy_module.alarming.service.LcmClient")
+    @mock.patch("osm_policy_module.autoscaling.service.MonClient")
+    @mock.patch("osm_policy_module.autoscaling.service.LcmClient")
+    @mock.patch.object(AutoscalingService, "delete_scaling_groups")
+    @mock.patch.object(AlarmingService, "delete_vnf_alarms")
+    def test_handle_vnf_terminated(
+        self,
+        delete_vnf_alarms,
+        delete_scaling_groups,
+        autoscaling_lcm_client,
+        autoscaling_mon_client,
+        alarming_lcm_client,
+        alarming_mon_client,
+    ):
+        async def mock_delete_scaling_groups(nsr_id, vnf_member_index):
+            pass
+
+        async def mock_delete_vnf_alarms(nsr_id, vnf_member_index):
+            pass
+
+        config = Config()
+        agent = PolicyModuleAgent(config, self.loop)
+        assert autoscaling_lcm_client.called
+        assert autoscaling_mon_client.called
+        assert alarming_lcm_client.called
+        assert alarming_mon_client.called
+        content = {
+            "nsr_id": "test_nsr_id",
+            "vnf_member_index": "1",
+            "operationState": "COMPLETED"
+        }
+        failed_content = {
+            "nsr_id": "test_nsr_id",
+            "vnf_member_index": "1",
+            "operationState": "FAILED"
+        }
+        delete_scaling_groups.side_effect = mock_delete_scaling_groups
+        delete_vnf_alarms.side_effect = mock_delete_vnf_alarms
+
+        self.loop.run_until_complete(agent._handle_vnf_terminated(content))
+        delete_scaling_groups.assert_called_with("test_nsr_id", "1")
+        delete_scaling_groups.reset_mock()
+
+        self.loop.run_until_complete(agent._handle_vnf_terminated(failed_content))
+        delete_scaling_groups.assert_not_called()
+
 
 if __name__ == "__main__":
     unittest.main()