The issue is resolved in vSphere ESXi 7.0 U3c available at
VMware DownloadsWorkaround:
Add the ToolsRamdisk option using the command below:
esxcfg-advcfg -A ToolsRamdisk --add-desc "Use VMware Tools repository from /tools ramdisk" --add-default "0" --add-type 'int' --add-min "0" --add-max "1"