Family businesses play a critical role in India’s industrial landscape with most SMEs owned and managed by business families. While most of them do not survive together across three or four generations, there is a small but impact making group that continue to thrive through internal and external challenges. They have strong family governance that helps them develop and practice sound leadership and ownership succession. There are several SMEs that are very innovative too. This chapter discusses the role of SMEs in the Indian economy and the key features of family owned SMEs that have both sound succession and innovativeness in them. The authors have followed case study approach in this chapter.