We report on XeCl excimer (308 nm) laser-assisted dry etching ablation (LADEA) of InP in a Cl2/He atmosphere. The InClx layer produced by the chlorination process was ablated for laser fluences below 80 mJ/cm2; this was determined to be the ablation threshold of InP for our experimental conditions. We studied the influence of Cl2/He mixture pressure, laser fluence and number of pulses on the etch rate of InP. Experiments were carried out with 5% and 10% concentrations of chlorine and at a laser repetition rate of 5 Hz. Employing linearly polarized light with an appropriate choice of experimental parameters (based on the afore mentioned studies), gratings were patterned by laser-induced coherent modulation of the beam at the semiconductor surface. We have also, for the first time, combined diffraction with LADEA to develop regular shaped features on semiconductor surfaces. Using this technique, 0.3-0.5 micrometers gratings were developed on the InP surfaces by an array of rectangular apertures. This approach offers the potential for fabrication of damage-free micro- or nano-structures, as well as substrates with patterns suitable for selective area deposition/epitaxy.