why does subinterface fail to forward packets

Let’s imagine that we have a simple topology like below:

Configure subinterfaces on both AR routers for VLAN tag termination:

[R1]interface GigabitEthernet 0/0/0.100
[R1-GigabitEthernet0/0/0.100]ip address 10.0.0.1 24
[R1-GigabitEthernet0/0/0.100]dot1q termination vid 100

[R2]int GigabitEthernet 0/0/0.100
[R2-GigabitEthernet0/0/0.100]ip address 10.0.0.2 24
[R2-GigabitEthernet0/0/0.100]dot1q termination vid 100

Try to ping IP address of neighboring router:

[R1]ping 10.0.0.2
  PING 10.0.0.2: 56  data bytes, press CTRL_C to break
    Request time out
    Request time out
    Request time out
    Request time out
    Request time out

  --- 10.0.0.2 ping statistics ---
    5 packet(s) transmitted
    0 packet(s) received
    100.00% packet loss

Let’s troubleshoot this problem by checking ARP table:

[R1]display arp all
IP ADDRESS      MAC ADDRESS     EXPIRE(M) TYPE        INTERFACE   VPN-INSTANCE 
VLAN/CEVLAN PVC                      
------------------------------------------------------------------------------
10.0.0.1        5489-98d1-3ea6            I -         GE0/0/0.100
------------------------------------------------------------------------------
Total:1         Dynamic:0       Static:0     Interface:1

Why can’t we see neighboring router in ARP table?

Because subinterfaces for VLAN tag termination discard broadcast packets after receiving the packets.

How to deal with it?

Just enable ARP broadcast on subinterfaces and check again:

[R1-GigabitEthernet0/0/0.100]arp broadcast enable

[R1]ping 10.0.0.2
  PING 10.0.0.2: 56  data bytes, press CTRL_C to break
    Reply from 10.0.0.2: bytes=56 Sequence=1 ttl=255 time=110 ms
    Reply from 10.0.0.2: bytes=56 Sequence=2 ttl=255 time=40 ms
    Reply from 10.0.0.2: bytes=56 Sequence=3 ttl=255 time=10 ms
    Reply from 10.0.0.2: bytes=56 Sequence=4 ttl=255 time=20 ms
    Reply from 10.0.0.2: bytes=56 Sequence=5 ttl=255 time=50 ms

  --- 10.0.0.2 ping statistics ---
    5 packet(s) transmitted
    5 packet(s) received
    0.00% packet loss
    round-trip min/avg/max = 10/46/110 ms

[R1]dis arp all
IP ADDRESS      MAC ADDRESS     EXPIRE(M) TYPE        INTERFACE   VPN-INSTANCE 
VLAN/CEVLAN PVC                      
------------------------------------------------------------------------------
10.0.0.1        5489-98d1-3ea6            I -         GE0/0/0.100
10.0.0.2        5489-9898-4fc2  20        DF0         GE0/0/0.100
 100/-
------------------------------------------------------------------------------
Total:2         Dynamic:1       Static:0     Interface:1

A packet can be forwarded, without ARP broadcast on the subinterface for VLAN tag termination, if the access device can send ARP packets.

If the access device cannot send ARP packets, the system discards the packet, when the arp broadcast enable command is not run on the subinterface for VLAN tag termination.

The system tags an ARP broadcast packet and forwards it through the subinterface for VLAN tag termination, when the arp broadcast enable command is run on the subinterface for VLAN tag termination.