diff --git a/components/kserve/feature_resources.go b/components/kserve/feature_resources.go
new file mode 100644
index 00000000000..c15971cc430
--- /dev/null
+++ b/components/kserve/feature_resources.go
@@ -0,0 +1,31 @@
+package kserve
+
+import (
+	"embed"
+	"io/fs"
+	"path"
+)
+
+//go:embed resources
+var kserveEmbeddedFS embed.FS
+
+const baseDir = "resources"
+
+var Resources = struct {
+	// ServiceMeshDir is the path to the Service Mesh templates.
+	ServiceMeshDir string
+	// InstallDir is the path to the Serving install templates.
+	InstallDir string
+	// GatewaysDir is the path to the Serving Istio gateways templates.
+	GatewaysDir string
+	// Source the templates to be used
+	Source fs.FS
+	// BaseDir is the path to the base of the embedded FS
+	BaseDir string
+}{
+	ServiceMeshDir: path.Join(baseDir, "servicemesh"),
+	InstallDir:     path.Join(baseDir, "serving-install"),
+	GatewaysDir:    path.Join(baseDir, "servicemesh", "routing"),
+	Source:         kserveEmbeddedFS,
+	BaseDir:        baseDir,
+}
diff --git a/pkg/feature/templates/servicemesh/kserve/activator-envoyfilter.tmpl b/components/kserve/resources/servicemesh/activator-envoyfilter.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/servicemesh/kserve/activator-envoyfilter.tmpl
rename to components/kserve/resources/servicemesh/activator-envoyfilter.tmpl.yaml
diff --git a/pkg/feature/templates/servicemesh/kserve/envoy-oauth-temp-fix.tmpl b/components/kserve/resources/servicemesh/envoy-oauth-temp-fix.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/servicemesh/kserve/envoy-oauth-temp-fix.tmpl
rename to components/kserve/resources/servicemesh/envoy-oauth-temp-fix.tmpl.yaml
diff --git a/pkg/feature/templates/servicemesh/kserve/grpc-envoyfilter-temp-fix.tmpl b/components/kserve/resources/servicemesh/grpc-envoyfilter-temp-fix.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/servicemesh/kserve/grpc-envoyfilter-temp-fix.tmpl
rename to components/kserve/resources/servicemesh/grpc-envoyfilter-temp-fix.tmpl.yaml
diff --git a/pkg/feature/templates/servicemesh/kserve/kserve-predictor-authorizationpolicy.tmpl b/components/kserve/resources/servicemesh/kserve-predictor-authorizationpolicy.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/servicemesh/kserve/kserve-predictor-authorizationpolicy.tmpl
rename to components/kserve/resources/servicemesh/kserve-predictor-authorizationpolicy.tmpl.yaml
diff --git a/pkg/feature/templates/serverless/serving-istio-gateways/istio-ingress-gateway.tmpl b/components/kserve/resources/servicemesh/routing/istio-ingress-gateway.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/serverless/serving-istio-gateways/istio-ingress-gateway.tmpl
rename to components/kserve/resources/servicemesh/routing/istio-ingress-gateway.tmpl.yaml
diff --git a/pkg/feature/templates/serverless/serving-istio-gateways/istio-local-gateway.yaml b/components/kserve/resources/servicemesh/routing/istio-local-gateway.yaml
similarity index 100%
rename from pkg/feature/templates/serverless/serving-istio-gateways/istio-local-gateway.yaml
rename to components/kserve/resources/servicemesh/routing/istio-local-gateway.yaml
diff --git a/pkg/feature/templates/serverless/serving-istio-gateways/local-gateway-svc.tmpl b/components/kserve/resources/servicemesh/routing/local-gateway-svc.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/serverless/serving-istio-gateways/local-gateway-svc.tmpl
rename to components/kserve/resources/servicemesh/routing/local-gateway-svc.tmpl.yaml
diff --git a/pkg/feature/templates/servicemesh/kserve/z-migrations/kserve-predictor-authorizationpolicy.patch.tmpl b/components/kserve/resources/servicemesh/z-migrations/kserve-predictor-authorizationpolicy.patch.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/servicemesh/kserve/z-migrations/kserve-predictor-authorizationpolicy.patch.tmpl
rename to components/kserve/resources/servicemesh/z-migrations/kserve-predictor-authorizationpolicy.patch.tmpl.yaml
diff --git a/pkg/feature/templates/serverless/serving-install/knative-serving.tmpl b/components/kserve/resources/serving-install/knative-serving.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/serverless/serving-install/knative-serving.tmpl
rename to components/kserve/resources/serving-install/knative-serving.tmpl.yaml
diff --git a/pkg/feature/templates/serverless/serving-install/service-mesh-subscription.tmpl b/components/kserve/resources/serving-install/service-mesh-subscription.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/serverless/serving-install/service-mesh-subscription.tmpl
rename to components/kserve/resources/serving-install/service-mesh-subscription.tmpl.yaml
diff --git a/pkg/feature/templates/serverless/serving-net-istio-secret-filtering.patch.tmpl b/components/kserve/resources/serving-net-istio-secret-filtering.patch.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/serverless/serving-net-istio-secret-filtering.patch.tmpl
rename to components/kserve/resources/serving-net-istio-secret-filtering.patch.tmpl.yaml
diff --git a/components/kserve/serverless_setup.go b/components/kserve/serverless_setup.go
index 47eac118bbb..1078ebf2097 100644
--- a/components/kserve/serverless_setup.go
+++ b/components/kserve/serverless_setup.go
@@ -12,8 +12,9 @@ func (k *Kserve) configureServerlessFeatures() feature.FeaturesProvider {
 	return func(handler *feature.FeaturesHandler) error {
 		servingDeploymentErr := feature.CreateFeature("serverless-serving-deployment").
 			For(handler).
+			ManifestSource(Resources.Source).
 			Manifests(
-				path.Join(feature.ServerlessDir, "serving-install"),
+				path.Join(Resources.InstallDir),
 			).
 			WithData(PopulateComponentSettings(k)).
 			PreConditions(
@@ -32,8 +33,9 @@ func (k *Kserve) configureServerlessFeatures() feature.FeaturesProvider {
 
 		servingNetIstioSecretFilteringErr := feature.CreateFeature("serverless-net-istio-secret-filtering").
 			For(handler).
+			ManifestSource(Resources.Source).
 			Manifests(
-				path.Join(feature.ServerlessDir, "serving-net-istio-secret-filtering.patch.tmpl"),
+				path.Join(Resources.BaseDir, "serving-net-istio-secret-filtering.patch.tmpl.yaml"),
 			).
 			WithData(PopulateComponentSettings(k)).
 			PreConditions(serverless.EnsureServerlessServingDeployed).
@@ -54,8 +56,9 @@ func (k *Kserve) configureServerlessFeatures() feature.FeaturesProvider {
 				serverless.ServingIngressDomain,
 			).
 			WithResources(serverless.ServingCertificateResource).
+			ManifestSource(Resources.Source).
 			Manifests(
-				path.Join(feature.ServerlessDir, "serving-istio-gateways"),
+				path.Join(Resources.GatewaysDir),
 			).
 			Load()
 		if serverlessGwErr != nil {
diff --git a/components/kserve/servicemesh_setup.go b/components/kserve/servicemesh_setup.go
index a945b700466..4fbd2ac35db 100644
--- a/components/kserve/servicemesh_setup.go
+++ b/components/kserve/servicemesh_setup.go
@@ -40,11 +40,12 @@ func (k *Kserve) defineServiceMeshFeatures(cli client.Client) feature.FeaturesPr
 		if authorinoInstalled {
 			kserveExtAuthzErr := feature.CreateFeature("kserve-external-authz").
 				For(handler).
+				ManifestSource(Resources.Source).
 				Manifests(
-					path.Join(feature.KServeDir, "activator-envoyfilter.tmpl"),
-					path.Join(feature.KServeDir, "envoy-oauth-temp-fix.tmpl"),
-					path.Join(feature.KServeDir, "kserve-predictor-authorizationpolicy.tmpl"),
-					path.Join(feature.KServeDir, "z-migrations"),
+					path.Join(Resources.ServiceMeshDir, "activator-envoyfilter.tmpl.yaml"),
+					path.Join(Resources.ServiceMeshDir, "envoy-oauth-temp-fix.tmpl.yaml"),
+					path.Join(Resources.ServiceMeshDir, "kserve-predictor-authorizationpolicy.tmpl.yaml"),
+					path.Join(Resources.ServiceMeshDir, "z-migrations"),
 				).
 				WithData(servicemesh.ClusterDetails).
 				Load()
@@ -58,8 +59,9 @@ func (k *Kserve) defineServiceMeshFeatures(cli client.Client) feature.FeaturesPr
 
 		temporaryFixesErr := feature.CreateFeature("kserve-temporary-fixes").
 			For(handler).
+			ManifestSource(Resources.Source).
 			Manifests(
-				path.Join(feature.KServeDir, "grpc-envoyfilter-temp-fix.tmpl"),
+				path.Join(Resources.ServiceMeshDir, "grpc-envoyfilter-temp-fix.tmpl.yaml"),
 			).
 			WithData(servicemesh.ClusterDetails).
 			Load()
diff --git a/controllers/dscinitialization/feature_resources.go b/controllers/dscinitialization/feature_resources.go
new file mode 100644
index 00000000000..7141adcef41
--- /dev/null
+++ b/controllers/dscinitialization/feature_resources.go
@@ -0,0 +1,31 @@
+package dscinitialization
+
+import (
+	"embed"
+	"io/fs"
+	"path"
+)
+
+//go:embed resources
+var dsciEmbeddedFS embed.FS
+
+const baseDir = "resources"
+
+var Templates = struct {
+	// ServiceMeshDir is the path to the Service Mesh templates.
+	ServiceMeshDir string
+	// InstallDir is the path to the Serving install templates.
+	AuthorinoDir string
+	// GatewaysDir is the path to the Serving Istio gateways templates.
+	MetricsDir string
+	// Source the templates to be used
+	Source fs.FS
+	// BaseDir is the path to the base of the embedded FS
+	BaseDir string
+}{
+	ServiceMeshDir: path.Join(baseDir, "servicemesh"),
+	AuthorinoDir:   path.Join(baseDir, "authorino"),
+	MetricsDir:     path.Join(baseDir, "metrics-collection"),
+	Source:         dsciEmbeddedFS,
+	BaseDir:        baseDir,
+}
diff --git a/pkg/feature/templates/servicemesh/authorino/auth-smm.tmpl b/controllers/dscinitialization/resources/authorino/auth-smm.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/servicemesh/authorino/auth-smm.tmpl
rename to controllers/dscinitialization/resources/authorino/auth-smm.tmpl.yaml
diff --git a/pkg/feature/templates/servicemesh/authorino/base/operator-cluster-wide-no-tls.tmpl b/controllers/dscinitialization/resources/authorino/base/operator-cluster-wide-no-tls.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/servicemesh/authorino/base/operator-cluster-wide-no-tls.tmpl
rename to controllers/dscinitialization/resources/authorino/base/operator-cluster-wide-no-tls.tmpl.yaml
diff --git a/pkg/feature/templates/servicemesh/authorino/deployment.injection.patch.tmpl b/controllers/dscinitialization/resources/authorino/deployment.injection.patch.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/servicemesh/authorino/deployment.injection.patch.tmpl
rename to controllers/dscinitialization/resources/authorino/deployment.injection.patch.tmpl.yaml
diff --git a/pkg/feature/templates/servicemesh/authorino/mesh-authz-ext-provider.patch.tmpl b/controllers/dscinitialization/resources/authorino/mesh-authz-ext-provider.patch.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/servicemesh/authorino/mesh-authz-ext-provider.patch.tmpl
rename to controllers/dscinitialization/resources/authorino/mesh-authz-ext-provider.patch.tmpl.yaml
diff --git a/pkg/feature/templates/servicemesh/metrics-collection/envoy-metrics-collection.tmpl b/controllers/dscinitialization/resources/metrics-collection/envoy-metrics-collection.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/servicemesh/metrics-collection/envoy-metrics-collection.tmpl
rename to controllers/dscinitialization/resources/metrics-collection/envoy-metrics-collection.tmpl.yaml
diff --git a/pkg/feature/templates/servicemesh/metrics-collection/pilot-metrics-collection.tmpl b/controllers/dscinitialization/resources/metrics-collection/pilot-metrics-collection.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/servicemesh/metrics-collection/pilot-metrics-collection.tmpl
rename to controllers/dscinitialization/resources/metrics-collection/pilot-metrics-collection.tmpl.yaml
diff --git a/pkg/feature/templates/servicemesh/base/create-smcp.tmpl b/controllers/dscinitialization/resources/servicemesh/create-smcp.tmpl.yaml
similarity index 100%
rename from pkg/feature/templates/servicemesh/base/create-smcp.tmpl
rename to controllers/dscinitialization/resources/servicemesh/create-smcp.tmpl.yaml
diff --git a/controllers/dscinitialization/servicemesh_setup.go b/controllers/dscinitialization/servicemesh_setup.go
index 5b8a9c02975..46f9861ef72 100644
--- a/controllers/dscinitialization/servicemesh_setup.go
+++ b/controllers/dscinitialization/servicemesh_setup.go
@@ -118,8 +118,9 @@ func (r *DSCInitializationReconciler) serviceMeshCapabilityFeatures(instance *ds
 		serviceMeshSpec := instance.Spec.ServiceMesh
 		smcpCreationErr := feature.CreateFeature("mesh-control-plane-creation").
 			For(handler).
+			ManifestSource(Templates.Source).
 			Manifests(
-				path.Join(feature.ServiceMeshDir, "base", "create-smcp.tmpl"),
+				path.Join(Templates.ServiceMeshDir),
 			).
 			PreConditions(
 				servicemesh.EnsureServiceMeshOperatorInstalled,
@@ -140,8 +141,9 @@ func (r *DSCInitializationReconciler) serviceMeshCapabilityFeatures(instance *ds
 				PreConditions(
 					servicemesh.EnsureServiceMeshInstalled,
 				).
+				ManifestSource(Templates.Source).
 				Manifests(
-					path.Join(feature.ServiceMeshDir, "metrics-collection"),
+					path.Join(Templates.MetricsDir),
 				).
 				Load()
 			if metricsCollectionErr != nil {
@@ -167,10 +169,11 @@ func (r *DSCInitializationReconciler) authorizationFeatures(instance *dsciv1.DSC
 
 		extAuthzErr := feature.CreateFeature("mesh-control-plane-external-authz").
 			For(handler).
+			ManifestSource(Templates.Source).
 			Manifests(
-				path.Join(feature.AuthDir, "auth-smm.tmpl"),
-				path.Join(feature.AuthDir, "base"),
-				path.Join(feature.AuthDir, "mesh-authz-ext-provider.patch.tmpl"),
+				path.Join(Templates.AuthorinoDir, "auth-smm.tmpl.yaml"),
+				path.Join(Templates.AuthorinoDir, "base"),
+				path.Join(Templates.AuthorinoDir, "mesh-authz-ext-provider.patch.tmpl.yaml"),
 			).
 			WithData(servicemesh.ClusterDetails).
 			PreConditions(
@@ -189,7 +192,7 @@ func (r *DSCInitializationReconciler) authorizationFeatures(instance *dsciv1.DSC
 					//
 					// To make it part of Service Mesh we have to patch it with injection
 					// enabled instead, otherwise it will not have proxy pod injected.
-					return f.ApplyManifest(path.Join(feature.AuthDir, "deployment.injection.patch.tmpl"))
+					return f.ApplyManifest(path.Join(Templates.AuthorinoDir, "deployment.injection.patch.tmpl.yaml"))
 				},
 			).
 			OnDelete(
diff --git a/pkg/feature/builder.go b/pkg/feature/builder.go
index a86a92a9b12..a8eaa9beebf 100644
--- a/pkg/feature/builder.go
+++ b/pkg/feature/builder.go
@@ -53,7 +53,6 @@ func (u *usingFeaturesHandler) For(featuresHandler *FeaturesHandler) *featureBui
 	fb := &featureBuilder{
 		name:            u.name,
 		featuresHandler: featuresHandler,
-		fsys:            embeddedFiles,
 		targetNS:        featuresHandler.DSCInitializationSpec.ApplicationsNamespace,
 	}
 
@@ -85,7 +84,18 @@ func createClient(config *rest.Config) partialBuilder {
 	}
 }
 
-func (fb *featureBuilder) Manifests(paths ...string) *featureBuilder {
+// Used to enforce that Manifests() is called after ManifestSource() in the chain.
+type featureBuilderWithManifestSource struct {
+	*featureBuilder
+}
+
+// ManifestSource sets the root file system (fsys) from which manifest paths are loaded.
+func (fb *featureBuilder) ManifestSource(fsys fs.FS) *featureBuilderWithManifestSource {
+	fb.fsys = fsys
+	return &featureBuilderWithManifestSource{featureBuilder: fb}
+}
+
+func (fb *featureBuilderWithManifestSource) Manifests(paths ...string) *featureBuilderWithManifestSource {
 	fb.builders = append(fb.builders, func(f *Feature) error {
 		var err error
 		var manifests []Manifest
@@ -177,6 +187,7 @@ func (fb *featureBuilder) Load() error {
 	}
 
 	feature.Spec.TargetNamespace = fb.targetNS
+	feature.fsys = fb.fsys
 
 	fb.featuresHandler.features = append(fb.featuresHandler.features, feature)
 
@@ -204,13 +215,6 @@ func (fb *featureBuilder) withDefaultClient() error {
 	return nil
 }
 
-// ManifestSource sets the root file system (fsys) from which manifest paths are loaded
-// If ManifestSource is not called in the builder chain, the default source will be the embeddedFiles.
-func (fb *featureBuilder) ManifestSource(fsys fs.FS) *featureBuilder {
-	fb.fsys = fsys
-	return fb
-}
-
 func (fb *featureBuilder) TargetNamespace(targetNs string) *featureBuilder {
 	fb.targetNS = targetNs
 
diff --git a/pkg/feature/feature.go b/pkg/feature/feature.go
index 521868e5eac..0bcd09c8a19 100644
--- a/pkg/feature/feature.go
+++ b/pkg/feature/feature.go
@@ -3,6 +3,7 @@ package feature
 import (
 	"context"
 	"fmt"
+	"io/fs"
 
 	"github.com/go-logr/logr"
 	"github.com/hashicorp/go-multierror"
@@ -33,6 +34,7 @@ type Feature struct {
 	preconditions  []Action
 	postconditions []Action
 	loaders        []Action
+	fsys           fs.FS
 
 	Log logr.Logger
 }
@@ -169,7 +171,7 @@ func (f *Feature) addCleanup(cleanupFuncs ...Action) {
 }
 
 func (f *Feature) ApplyManifest(path string) error {
-	m, err := loadManifestsFrom(embeddedFiles, path)
+	m, err := loadManifestsFrom(f.fsys, path)
 	if err != nil {
 		return err
 	}
diff --git a/pkg/feature/manifest.go b/pkg/feature/manifest.go
index c8a6f8973f0..c579bdec46d 100644
--- a/pkg/feature/manifest.go
+++ b/pkg/feature/manifest.go
@@ -2,12 +2,10 @@ package feature
 
 import (
 	"bytes"
-	"embed"
 	"fmt"
 	"html/template"
 	"io"
 	"io/fs"
-	"path"
 	"path/filepath"
 	"regexp"
 	"strings"
@@ -16,17 +14,6 @@ import (
 	"k8s.io/apimachinery/pkg/apis/meta/v1/unstructured"
 )
 
-//go:embed templates
-var embeddedFiles embed.FS
-
-var (
-	BaseDir        = "templates"
-	ServiceMeshDir = path.Join(BaseDir, "servicemesh")
-	ServerlessDir  = path.Join(BaseDir, "serverless")
-	AuthDir        = path.Join(ServiceMeshDir, "authorino")
-	KServeDir      = path.Join(ServiceMeshDir, "kserve")
-)
-
 type Manifest interface {
 	// Process allows any arbitrary struct to be passed and used while processing the content of the manifest.
 	Process(data any) ([]*unstructured.Unstructured, error)
@@ -145,13 +132,13 @@ func CreateTemplateManifestFrom(fsys fs.FS, path string) *templateManifest { //n
 	return &templateManifest{
 		name:  basePath,
 		path:  path,
-		patch: strings.Contains(basePath, ".patch"),
+		patch: strings.Contains(basePath, ".patch."),
 		fsys:  fsys,
 	}
 }
 
 func isTemplateManifest(path string) bool {
-	return strings.Contains(path, ".tmpl")
+	return strings.Contains(filepath.Base(path), ".tmpl.")
 }
 
 func convertToUnstructuredSlice(resources string) ([]*unstructured.Unstructured, error) {
diff --git a/tests/integration/features/fixtures/const.go b/tests/integration/features/fixtures/const.go
index 1a5367d4212..92c03c11e9c 100644
--- a/tests/integration/features/fixtures/const.go
+++ b/tests/integration/features/fixtures/const.go
@@ -7,4 +7,5 @@ const (
 	Timeout = 5 * time.Second
 	// Interval is the default interval for polling for a condition to be met.
 	Interval = 250 * time.Millisecond
+	BaseDir  = "templates"
 )
diff --git a/tests/integration/features/fixtures/templates/local-gateway-svc.tmpl.yaml b/tests/integration/features/fixtures/templates/local-gateway-svc.tmpl.yaml
new file mode 100644
index 00000000000..16f9fc5d8c9
--- /dev/null
+++ b/tests/integration/features/fixtures/templates/local-gateway-svc.tmpl.yaml
@@ -0,0 +1,16 @@
+apiVersion: v1
+kind: Service
+metadata:
+  labels:
+    experimental.istio.io/disable-gateway-port-translation: "true"
+  name: knative-local-gateway
+  namespace: {{ .ControlPlane.Namespace }}
+spec:
+  ports:
+    - name: http2
+      port: 80
+      protocol: TCP
+      targetPort: 8081
+  selector:
+    knative: ingressgateway
+  type: ClusterIP
diff --git a/tests/integration/features/fixtures/templates/mesh-authz-ext-provider.patch.tmpl.yaml b/tests/integration/features/fixtures/templates/mesh-authz-ext-provider.patch.tmpl.yaml
new file mode 100644
index 00000000000..1a91092c7c2
--- /dev/null
+++ b/tests/integration/features/fixtures/templates/mesh-authz-ext-provider.patch.tmpl.yaml
@@ -0,0 +1,13 @@
+apiVersion: maistra.io/v2
+kind: ServiceMeshControlPlane
+metadata:
+  name: {{ .ControlPlane.Name }}
+  namespace: {{ .ControlPlane.Namespace }}
+spec:
+  techPreview:
+    meshConfig:
+      extensionProviders:
+      - name: {{ .AppNamespace }}-auth-provider
+        envoyExtAuthzGrpc:
+          service: {{ .AuthProviderName }}-authorino-authorization.{{ .Auth.Namespace }}.svc.cluster.local
+          port: 50051
diff --git a/tests/integration/features/manifests_int_test.go b/tests/integration/features/manifests_int_test.go
index d08f6992fd6..e2882ccdb3d 100644
--- a/tests/integration/features/manifests_int_test.go
+++ b/tests/integration/features/manifests_int_test.go
@@ -40,43 +40,17 @@ var _ = Describe("Manifest sources", func() {
 		objectCleaner.DeleteAll(namespace)
 	})
 
-	It("should be able to process an embedded template from the default location", func() {
+	It("should be able to process an embedded YAML file", func() {
 		// given
 		featuresHandler := feature.ClusterFeaturesHandler(dsci, func(handler *feature.FeaturesHandler) error {
-			createServiceErr := feature.CreateFeature("create-local-gw-svc").
-				For(handler).
-				UsingConfig(envTest.Config).
-				Manifests(path.Join(feature.ServerlessDir, "serving-istio-gateways", "local-gateway-svc.tmpl")).
-				Load()
-
-			Expect(createServiceErr).ToNot(HaveOccurred())
-
-			return nil
-		})
-
-		// when
-		Expect(featuresHandler.Apply()).To(Succeed())
-
-		// then
-		service, err := fixtures.GetService(envTestClient, namespace.Name, "knative-local-gateway")
-		Expect(err).ToNot(HaveOccurred())
-		Expect(service.Name).To(Equal("knative-local-gateway"))
-	})
-
-	It("should be able to process an embedded YAML file from the default location", func() {
-		// given
-		knativeNs, nsErr := cluster.CreateNamespace(envTestClient, "knative-serving")
-		Expect(nsErr).ToNot(HaveOccurred())
-		defer objectCleaner.DeleteAll(knativeNs)
-
-		featuresHandler := feature.ClusterFeaturesHandler(dsci, func(handler *feature.FeaturesHandler) error {
-			createGatewayErr := feature.CreateFeature("create-local-gateway").
+			createNamespaceErr := feature.CreateFeature("create-namespace").
 				For(handler).
 				UsingConfig(envTest.Config).
-				Manifests(path.Join(feature.ServerlessDir, "serving-istio-gateways", "istio-local-gateway.yaml")).
+				ManifestSource(fixtures.TestEmbeddedFiles).
+				Manifests(path.Join(fixtures.BaseDir, "namespace.yaml")).
 				Load()
 
-			Expect(createGatewayErr).ToNot(HaveOccurred())
+			Expect(createNamespaceErr).ToNot(HaveOccurred())
 
 			return nil
 		})
@@ -85,22 +59,23 @@ var _ = Describe("Manifest sources", func() {
 		Expect(featuresHandler.Apply()).To(Succeed())
 
 		// then
-		gateway, err := getGateway(envTest.Config, "knative-serving", "knative-local-gateway")
+		embeddedNs, err := fixtures.GetNamespace(envTestClient, "embedded-test-ns")
+		defer objectCleaner.DeleteAll(embeddedNs)
 		Expect(err).ToNot(HaveOccurred())
-		Expect(gateway).ToNot(BeNil())
+		Expect(embeddedNs.Name).To(Equal("embedded-test-ns"))
 	})
 
-	It("should be able to process an embedded file from a non default location", func() {
+	It("should be able to process an embedded template file", func() {
 		// given
 		featuresHandler := feature.ClusterFeaturesHandler(dsci, func(handler *feature.FeaturesHandler) error {
-			createNamespaceErr := feature.CreateFeature("create-namespace").
+			createServiceErr := feature.CreateFeature("create-local-gw-svc").
 				For(handler).
 				UsingConfig(envTest.Config).
 				ManifestSource(fixtures.TestEmbeddedFiles).
-				Manifests(path.Join(feature.BaseDir, "namespace.yaml")).
+				Manifests(path.Join(fixtures.BaseDir, "local-gateway-svc.tmpl.yaml")).
 				Load()
 
-			Expect(createNamespaceErr).ToNot(HaveOccurred())
+			Expect(createServiceErr).ToNot(HaveOccurred())
 
 			return nil
 		})
@@ -109,10 +84,9 @@ var _ = Describe("Manifest sources", func() {
 		Expect(featuresHandler.Apply()).To(Succeed())
 
 		// then
-		embeddedNs, err := fixtures.GetNamespace(envTestClient, "embedded-test-ns")
-		defer objectCleaner.DeleteAll(embeddedNs)
+		service, err := fixtures.GetService(envTestClient, namespace.Name, "knative-local-gateway")
 		Expect(err).ToNot(HaveOccurred())
-		Expect(embeddedNs.Name).To(Equal("embedded-test-ns"))
+		Expect(service.Name).To(Equal("knative-local-gateway"))
 	})
 
 	const nsYAML = `apiVersion: v1
diff --git a/tests/integration/features/servicemesh_feature_test.go b/tests/integration/features/servicemesh_feature_test.go
index 85de0213075..725401bc93d 100644
--- a/tests/integration/features/servicemesh_feature_test.go
+++ b/tests/integration/features/servicemesh_feature_test.go
@@ -6,12 +6,8 @@ import (
 
 	apiextensionsv1 "k8s.io/apiextensions-apiserver/pkg/apis/apiextensions/v1"
 	"k8s.io/apimachinery/pkg/api/errors"
-	metav1 "k8s.io/apimachinery/pkg/apis/meta/v1"
 	"k8s.io/apimachinery/pkg/apis/meta/v1/unstructured"
-	"k8s.io/apimachinery/pkg/runtime/schema"
 	"k8s.io/apimachinery/pkg/util/yaml"
-	"k8s.io/client-go/dynamic"
-	"k8s.io/client-go/rest"
 	"sigs.k8s.io/controller-runtime/pkg/client"
 	"sigs.k8s.io/controller-runtime/pkg/envtest"
 
@@ -202,7 +198,8 @@ var _ = Describe("Service Mesh setup", func() {
 					handler := feature.ClusterFeaturesHandler(dsci, func(handler *feature.FeaturesHandler) error {
 						return feature.CreateFeature("control-plane-with-external-authz-provider").
 							For(handler).
-							Manifests(path.Join(feature.AuthDir, "mesh-authz-ext-provider.patch.tmpl")).
+							ManifestSource(fixtures.TestEmbeddedFiles).
+							Manifests(path.Join("templates", "mesh-authz-ext-provider.patch.tmpl.yaml")).
 							OnDelete(
 								servicemesh.RemoveExtensionProvider,
 							).
@@ -273,24 +270,6 @@ func installServiceMeshCRD() *apiextensionsv1.CustomResourceDefinition {
 	return smcpCrdObj
 }
 
-func getGateway(cfg *rest.Config, namespace, name string) (*unstructured.Unstructured, error) {
-	dynamicClient, err := dynamic.NewForConfig(cfg)
-	if err != nil {
-		return nil, err
-	}
-	gwGvr := schema.GroupVersionResource{
-		Group:    "networking.istio.io",
-		Version:  "v1beta1",
-		Resource: "gateways",
-	}
-
-	gateway, err := dynamicClient.Resource(gwGvr).Namespace(namespace).Get(context.TODO(), name, metav1.GetOptions{})
-	if err != nil {
-		return nil, err
-	}
-	return gateway, nil
-}
-
 func createServiceMeshControlPlane(name, namespace string) {
 	serviceMeshControlPlane := &unstructured.Unstructured{
 		Object: map[string]interface{}{