diff --git a/app/client/cypress/e2e/Regression/ClientSide/Onboarding/StartFromScratch_spec.ts b/app/client/cypress/e2e/Regression/ClientSide/Onboarding/StartFromScratch_spec.ts
deleted file mode 100644
index bc71bf9bdf..0000000000
--- a/app/client/cypress/e2e/Regression/ClientSide/Onboarding/StartFromScratch_spec.ts
+++ /dev/null
@@ -1,86 +0,0 @@
-import template from "../../../../locators/TemplatesLocators.json";
-import { featureFlagIntercept } from "../../../../support/Objects/FeatureFlags";
-import {
-  agHelper,
-  onboarding,
-  dataSources,
-  templates,
-  homePage,
-} from "../../../../support/Objects/ObjectsCore";
-import {
-  AppSidebar,
-  AppSidebarButton,
-} from "../../../../support/Pages/EditorNavigation";
-
-describe(
-  "Start with scratch userflow",
-  { tags: ["@tag.excludeForAirgap", "@tag.Templates"] },
-  function () {
-    beforeEach(() => {
-      homePage.Signout(true);
-      featureFlagIntercept(
-        {
-          ab_show_templates_instead_of_blank_canvas_enabled: true,
-          ab_create_new_apps_enabled: true,
-        },
-        false,
-      );
-      agHelper.GenerateUUID();
-      cy.get("@guid").then((uid) => {
-        homePage.SignUp(`${uid}@appsmithtest.com`, uid as unknown as string);
-      });
-      agHelper.GetNClick(onboarding.locators.startFromScratchCard);
-      onboarding.closeIntroModal();
-      featureFlagIntercept({
-        ab_show_templates_instead_of_blank_canvas_enabled: true,
-      });
-      agHelper.AssertElementLength(
-        templates.locators._buildingBlockCardOnCanvas,
-        3,
-      );
-    });
-
-    it("1. onboarding flow - should check page entity selection in explorer", function () {
-      agHelper.GetNClick(onboarding.locators.seeMoreButtonOnCanvas, 0, true);
-
-      agHelper.AssertElementVisibility(template.templateDialogBox);
-
-      const filterItemWrapper = agHelper.GetElement(".filter-wrapper");
-
-      const templateFilterItemSelectedIcon = filterItemWrapper.find(
-        templates.locators._templateFilterItemSelectedIcon,
-      );
-      templateFilterItemSelectedIcon.should("have.length", 1);
-      templateFilterItemSelectedIcon
-        .first()
-        .prev()
-        .should("have.text", "Building Blocks");
-      agHelper.GetNClick(template.closeButton);
-    });
-
-    it("2. `Connect your data` pop up should come up when we fork a building block from canvas.", function () {
-      agHelper.GetNClick(templates.locators._buildingBlockCardOnCanvas);
-
-      agHelper.WaitUntilEleDisappear("Importing template");
-      agHelper.AssertElementVisibility(
-        templates.locators._datasourceConnectPromptSubmitBtn,
-      );
-      agHelper.GetNClick(templates.locators._datasourceConnectPromptSubmitBtn);
-      cy.url().should("include", "datasources/NEW");
-    });
-
-    it("3. `Connect your data` pop up should NOT come up when user already has a datasource.", function () {
-      dataSources.CreateMockDB("Users");
-      AppSidebar.navigate(AppSidebarButton.Editor);
-
-      agHelper.GetNClick(templates.locators._buildingBlockCardOnCanvas, 0);
-
-      agHelper.WaitUntilEleDisappear("Importing template");
-
-      agHelper.AssertElementAbsence(
-        templates.locators._datasourceConnectPromptSubmitBtn,
-        4000,
-      );
-    });
-  },
-);
diff --git a/app/client/src/ce/pages/Applications/CreateNewAppFromTemplateModal/CreateNewAppFromTemplatesWrapper.tsx b/app/client/src/ce/pages/Applications/CreateNewAppFromTemplateModal/CreateNewAppFromTemplatesWrapper.tsx
index 2214a40434..c5c706b215 100644
--- a/app/client/src/ce/pages/Applications/CreateNewAppFromTemplateModal/CreateNewAppFromTemplatesWrapper.tsx
+++ b/app/client/src/ce/pages/Applications/CreateNewAppFromTemplateModal/CreateNewAppFromTemplatesWrapper.tsx
@@ -1,5 +1,7 @@
-import React from "react";
+import React, { useEffect } from "react";
 import CreateNewAppFromTemplatesModal from ".";
+import { getIsReconnectingDatasourcesModalOpen } from "@appsmith/selectors/entitiesSelector";
+import { useSelector } from "react-redux";
 
 interface Props {
   currentWorkspaceId: string;
@@ -12,6 +14,16 @@ const CreateNewAppFromTemplatesWrapper = ({
   isOpen,
   onModalClose,
 }: Props) => {
+  const isReconnectingModalOpen = useSelector(
+    getIsReconnectingDatasourcesModalOpen,
+  );
+
+  useEffect(() => {
+    if (isReconnectingModalOpen) {
+      onModalClose();
+    }
+  }, [isReconnectingModalOpen]);
+
   return (
     <CreateNewAppFromTemplatesModal
       currentWorkSpaceId={currentWorkspaceId}