[ekimekim]

Using a template to render out text that is then interpreted as something else (YAML in this case) is always fraught with quoting issues, complex workarounds, and for YAML specifically indentation issues.

You see the same thing with the C preprocessor - there's a very good reason that basically no language since has copied that design, and it's infamous for being full of footguns.

A far simpler and more manageable solution is to generate the same data structure (the final manifest) in a language which can actually represent those data structures directly. That might be a dedicated language like Cue or Jsonnet, or it could just be a general purpose programming language. You can generate the data structure using whatever tools you like, and then render it to JSON or YAML to be consumed by whatever tool is uploading it to kubernetes (kubectl apply, helm, etc).