Create template files in the folder from which new file request was made

app/assets/javascripts/ide/components/new_dropdown/modal.vue

@@ -4,7 +4,7 @@ import flash from '~/flash';
 import { __, sprintf, s__ } from '~/locale';
 import { GlModal } from '@gitlab/ui';
 import { modalTypes } from '../../constants';
-import { trimPathComponents } from '../../utils';
+import { trimPathComponents, getPathParent } from '../../utils';
 
 export default {
   components: {
@@ -85,8 +85,10 @@ export default {
       }
     },
     createFromTemplate(template) {
+      const parent = getPathParent(this.entryName);
+      const name = parent ? `${parent}/${template.name}` : template.name;
       this.createTempEntry({
-        name: template.name,
+        name,
         type: this.modalType,
       });
 

changelogs/unreleased/templates-current-folder-fix.yml

+---
+title: "Web IDE: Create template files in the folder from which new file request was made"
+merge_request: 33585
+author: Ashesh Vidyut
+type: fixed

spec/frontend/ide/components/new_dropdown/modal_spec.js

@@ -120,6 +120,46 @@ describe('new file modal component', () => {
     });
   });
 
+  describe('createFromTemplate', () => {
+    let store;
+
+    beforeEach(() => {
+      store = createStore();
+      store.state.entries = {
+        'test-path/test': {
+          name: 'test',
+          deleted: false,
+        },
+      };
+
+      vm = createComponentWithStore(Component, store).$mount();
+      vm.open('blob');
+
+      jest.spyOn(vm, 'createTempEntry').mockImplementation();
+    });
+
+    it.each`
+      entryName                  | newFilePath
+      ${''}                      | ${'.gitignore'}
+      ${'README.md'}             | ${'.gitignore'}
+      ${'test-path/test/'}       | ${'test-path/test/.gitignore'}
+      ${'test-path/test'}        | ${'test-path/.gitignore'}
+      ${'test-path/test/abc.md'} | ${'test-path/test/.gitignore'}
+    `(
+      'creates a new file with the given template name in appropriate directory for path: $path',
+      ({ entryName, newFilePath }) => {
+        vm.entryName = entryName;
+
+        vm.createFromTemplate({ name: '.gitignore' });
+
+        expect(vm.createTempEntry).toHaveBeenCalledWith({
+          name: newFilePath,
+          type: 'blob',
+        });
+      },
+    );
+  });
+
   describe('submitForm', () => {
     let store;