diff --git a/mmv1/third_party/terraform/resources/resource_sql_database_instance.go.erb b/mmv1/third_party/terraform/resources/resource_sql_database_instance.go.erb
index 39df21521ae3..6966214fb5a8 100644
--- a/mmv1/third_party/terraform/resources/resource_sql_database_instance.go.erb
+++ b/mmv1/third_party/terraform/resources/resource_sql_database_instance.go.erb
@@ -1527,10 +1527,32 @@ func resourceSqlDatabaseInstanceUpdate(d *schema.ResourceData, meta interface{})
 	var op *sqladmin.Operation
 	var instance *sqladmin.DatabaseInstance
 
+	desiredDatabaseVersion := d.Get("database_version")
+
+	// Check if the activation policy is being updated. If it is being changed to ALWAYS this should be done first.
+	if d.HasChange("settings.0.activation_policy") && d.Get("settings.0.activation_policy").(string) == "ALWAYS" {
+		instance = &sqladmin.DatabaseInstance{Settings: &sqladmin.Settings{ActivationPolicy: "ALWAYS"}}
+		err = retryTimeDuration(func() (rerr error) {
+			op, rerr = config.NewSqlAdminClient(userAgent).Instances.Patch(project, d.Get("name").(string), instance).Do()
+			return rerr
+		}, d.Timeout(schema.TimeoutUpdate), isSqlOperationInProgressError)
+		if err != nil {
+			return fmt.Errorf("Error, failed to patch instance settings for %s: %s", instance.Name, err)
+		}
+		err = sqlAdminOperationWaitTime(config, op, project, "Patch Instance", userAgent, d.Timeout(schema.TimeoutUpdate))
+		if err != nil {
+			return err
+		}
+		err = resourceSqlDatabaseInstanceRead(d, meta)
+		if err != nil {
+			return err
+		}
+	}
+
 	// Check if the database version is being updated, because patching database version is an atomic operation and can not be
 	// performed with other fields, we first patch database version before updating the rest of the fields.
-	if v, ok := d.GetOk("database_version"); ok {
-		instance = &sqladmin.DatabaseInstance{DatabaseVersion: v.(string)}
+	if d.HasChange("database_version") {
+		instance = &sqladmin.DatabaseInstance{DatabaseVersion: desiredDatabaseVersion.(string)}
 		err = retryTimeDuration(func() (rerr error) {
 			op, rerr = config.NewSqlAdminClient(userAgent).Instances.Patch(project, d.Get("name").(string), instance).Do()
 			return rerr
@@ -1548,7 +1570,7 @@ func resourceSqlDatabaseInstanceUpdate(d *schema.ResourceData, meta interface{})
 		}
 	}
 
-    // Check if the root_password is being updated, because updating root_password is an atomic operation and can not be
+	// Check if the root_password is being updated, because updating root_password is an atomic operation and can not be
 	// performed with other fields, we first update root password before updating the rest of the fields.
 	if d.HasChange("root_password") {
 		oldPwd, newPwd := d.GetChange("root_password")
diff --git a/mmv1/third_party/terraform/tests/resource_sql_database_instance_test.go.erb b/mmv1/third_party/terraform/tests/resource_sql_database_instance_test.go.erb
index f705bc118249..a7f4d1d86b77 100644
--- a/mmv1/third_party/terraform/tests/resource_sql_database_instance_test.go.erb
+++ b/mmv1/third_party/terraform/tests/resource_sql_database_instance_test.go.erb
@@ -1399,40 +1399,6 @@ func TestAccSqlDatabaseInstance_Timezone(t *testing.T) {
 }
 
 
-func TestAccSqlDatabaseInstance_mysqlMajorVersionUpgrade(t *testing.T) {
-	t.Parallel()
-
-	databaseName := "tf-test-" + randString(t, 10)
-
-	vcrTest(t, resource.TestCase{
-		PreCheck:     func() { testAccPreCheck(t) },
-		Providers:    testAccProviders,
-		CheckDestroy: testAccSqlDatabaseInstanceDestroyProducer(t),
-		Steps: []resource.TestStep{
-			{
-				Config: fmt.Sprintf(
-					testGoogleSqlDatabaseInstance_basic3, databaseName),
-			},
-			{
-				ResourceName:      "google_sql_database_instance.instance",
-				ImportState:       true,
-				ImportStateVerify: true,
-				ImportStateVerifyIgnore: []string{"root_password", "deletion_protection"},
-			},
-			{
-				Config: fmt.Sprintf(
-					testGoogleSqlDatabaseInstance_basic3_update, databaseName),
-			},
-			{
-				ResourceName:            "google_sql_database_instance.instance",
-				ImportState:             true,
-				ImportStateVerify:       true,
-				ImportStateVerifyIgnore: []string{"root_password", "deletion_protection"},
-			},
-		},
-	})
-}
-
 func TestAccSqlDatabaseInstance_sqlMysqlInstancePvpExample(t *testing.T) {
 	t.Parallel()
 
@@ -1530,6 +1496,65 @@ func TestAccSqlDatabaseInstance_rootPasswordShouldBeUpdatable(t *testing.T) {
 	})
 }
 
+func TestAccSqlDatabaseInstance_activationPolicy(t *testing.T) {
+	t.Parallel()
+
+	instanceName := "tf-test-" + randString(t, 10)
+
+	vcrTest(t, resource.TestCase{
+		PreCheck:     func() { testAccPreCheck(t) },
+		Providers:    testAccProviders,
+		CheckDestroy: testAccSqlDatabaseInstanceDestroyProducer(t),
+		Steps: []resource.TestStep{
+			{
+				Config: testGoogleSqlDatabaseInstance_activationPolicy(instanceName, "MYSQL_5_7", "ALWAYS", true),
+			},
+			{
+				ResourceName:            "google_sql_database_instance.instance",
+				ImportState:             true,
+				ImportStateVerify:       true,
+				ImportStateVerifyIgnore: []string{"deletion_protection", "root_password"},
+			},
+			{
+				Config: testGoogleSqlDatabaseInstance_activationPolicy(instanceName, "MYSQL_5_7", "NEVER", true),
+			},
+			{
+				ResourceName:            "google_sql_database_instance.instance",
+				ImportState:             true,
+				ImportStateVerify:       true,
+				ImportStateVerifyIgnore: []string{"deletion_protection", "root_password"},
+			},
+			{
+				Config: testGoogleSqlDatabaseInstance_activationPolicy(instanceName, "MYSQL_8_0_18", "ALWAYS", true),
+			},
+			{
+				ResourceName:            "google_sql_database_instance.instance",
+				ImportState:             true,
+				ImportStateVerify:       true,
+				ImportStateVerifyIgnore: []string{"deletion_protection", "root_password"},
+			},
+			{
+				Config: testGoogleSqlDatabaseInstance_activationPolicy(instanceName, "MYSQL_8_0_26", "NEVER", true),
+			},
+			{
+				ResourceName:            "google_sql_database_instance.instance",
+				ImportState:             true,
+				ImportStateVerify:       true,
+				ImportStateVerifyIgnore: []string{"deletion_protection", "root_password"},
+			},
+			{
+				Config: testGoogleSqlDatabaseInstance_activationPolicy(instanceName, "MYSQL_8_0_26", "ALWAYS", false),
+			},
+			{
+				ResourceName:            "google_sql_database_instance.instance",
+				ImportState:             true,
+				ImportStateVerify:       true,
+				ImportStateVerifyIgnore: []string{"deletion_protection", "root_password"},
+			},
+		},
+	})
+}
+
 func TestAccSqlDatabaseInstance_ReplicaPromoteSuccessful(t *testing.T) {
 	t.Parallel()
 
@@ -3433,3 +3458,18 @@ resource "google_sql_database_instance" "main" {
 	}
 }`, instance, databaseVersion, rootPassword)
 }
+
+func testGoogleSqlDatabaseInstance_activationPolicy(instance, databaseVersion, activationPolicy string, deletionProtection bool) string {
+	return fmt.Sprintf(`
+resource "google_sql_database_instance" "instance" {
+  name                = "%s"
+  region              = "us-central1"
+  database_version    = "%s"
+  deletion_protection = %t
+  settings {
+    tier              = "db-f1-micro"
+    activation_policy = "%s"
+  }
+}
+`, instance, databaseVersion, deletionProtection, activationPolicy)
+}