Integrated circuit packaging system with etched ring and die paddle and method of manufacture thereof

A method of manufacture of an integrated circuit packaging system is provided including: forming a D-ring includes half etching a paddle, etching a ring, and etching a tie bar. The tie bar is between the paddle and the ring. The system further includes mounting an integrated circuit die on a central portion of the D-ring, connecting the integrated circuit die and the D-ring, and encapsulating the integrated circuit die and a portion of the D-ring.