LinuxQuestions.org - Query related to introducing traffic redirection rules with iptables

I am trying to forward localhost DNS requests in an alpine container deployed in an ECS task that are originally intended to port 53 to port 8700 where I have a custom DNS resolver running on my box.

I have made sure to add 127.0.0.1 as the first nameserver in /etc/resolv.conf

To support traffic redirection I added the following commands to modify iptable NAT rules

Code:

/# iptables -t nat -N DNS_REDIRECT

/# iptables -t nat -A DNS_REDIRECT -p udp -d 127.0.0.1 --dport 53 -j DNAT --to-destination 127.0.0.1:8700

/# iptables -t nat -A OUTPUT -p udp -d 127.0.0.1 --dport 53 -j DNS_REDIRECT

This is output of the rules present in the NAT table

Code:

/ # iptables -t nat -L -v

Chain PREROUTING (policy ACCEPT 0 packets, 0 bytes)

 pkts bytes target    prot opt in    out    source              destination        



Chain INPUT (policy ACCEPT 0 packets, 0 bytes)

 pkts bytes target    prot opt in    out    source              destination        



Chain OUTPUT (policy ACCEPT 110 packets, 7653 bytes)

 pkts bytes target    prot opt in    out    source              destination        

  39  3693 DNS_REDIRECT  udp  --  any    any    anywhere            localhost            udp dpt:domain



Chain POSTROUTING (policy ACCEPT 0 packets, 0 bytes)

 pkts bytes target    prot opt in    out    source              destination        



Chain DNS_REDIRECT (1 references)

 pkts bytes target    prot opt in    out    source              destination        

  39  3693 DNAT      udp  --  any    any    anywhere            localhost            udp dpt:domain to:127.0.0.1:8700

The DNS server on 8700 is running fine and serving responses properly. I was able to verify this with dig -p 8700 foo.com.

On executing dig foo.com, I get the following error

;; communications error to 127.0.0.1#53: timed out
;; communications error to 127.0.0.1#53: timed out
;; communications error to 127.0.0.1#53: timed out
;; communications error to 127.0.0.1#53: timed out
;; communications error to 127.0.0.1#53: timed out

From application logs, I can see that the DNS server has responded back with the correct response, but iptable rules are somehow mangling the UDP packets. Can someone help me debug this further?