Preserving indentation from file content when reading file in terraform and passing it to a docker container

Question

resource "google_compute_instance_template" "envoy_instance_template" {

  disk {
    source_image = "gce-uefi-images/cos-stable"
    disk_size_gb = var.disk_size
    disk_type    = var.disk_type
    boot         = true
  }

  metadata = {
    gce-container-declaration = yamlencode({
      apiVersion = "v1",
      kind       = "Pod",
      metadata = {
        name = "envoy"
      }
      spec = {
        containers = [{
          name            = "envoy",
          image           = "myimage",
          imagePullPolicy = "Always",
          ports = {
            containerPort = "443",
            hostPort      = "443",
          },
          env = [
            {
              name  = "ENVOY_CONFIG",
              value = templatefile("${path.module}/envoy.tmpl", 
                      { 
                        routes = var.envoy_config.routes
                        clusters = var.envoy_config.clusters
                      }),
            }
          ]
        }]
      }
    })
    google-logging-enabled = "TRUE"
    enable-oslogin         = "TRUE"
  }

I simply want to start a docker container on top of gce-uefi-images/cos-stable. With the above code, the above gets started as expected.

However, the newline characters and indentation in ENVOY_CONFIG is gone when the container starts.

The templatefile function works correctly and produce a yaml file which is expected. However, inside the container ENVOY_CONFIG loses all the indentation.

I tried using yamlencode but it didn't work either.

What's the correct way to preserve the yaml file content (indentation and newline characters) in the environment variable ENVOY_CONFIG?