Groom takes look round capital (7)
I believe the answer is:
colombo
'capital' is the definition.
(Colombo is an example)
'groom takes look round' is the wordplay.
'groom' becomes 'comb' (combing is a kind of grooming).
'takes' means one lot of letters goes inside another.
'look' becomes 'lo' (archaic term meaning 'look!').
'round' becomes 'o' (round can mean a round object).
'comb' placed around 'lo' is 'colomb'.
'colomb'+'o'='COLOMBO'
(Other definitions for colombo that I've seen before include "Asian capital" , "Capital of Sri Lanka" , "Sri Lankan port" , "Sri Lankan capital" , "Sri Lankan city" .)