The emerging needs to boost manufacturing sector have made developing nations to adopt smart system in their conventional manufacturing system. To achieve this, Smart Manufacturing Systems (SMS) are proving its potential in every way and especially in “Small and Medium Enterprises (SMEs)”, which are highly responsible for economic growth the country. To this effect, this paper aims to investigate “Critical Success Factors (CSFs)” for adoption of SMS in Indian SMEs. The factors are identified on four managerial aspects namely Strategic, Tactical, Operational and Performance. Further, these factors are modelled using an integrated ISM-DEMATEL (“Interpretive Structural Modelling—Decision Making Trial and Evaluation Laboratory”) approach, which not only provides the hierarchy but also reveals the intensity of relationship among the factors. The result shows that strategic level factors like Government initiatives, Future vision of the organization and Technological factors are most crucial for SMS adoption in Indian SMEs. The hierarchy obtained is also in line with importance of managerial decisions, which validate the proposed model. The findings of the study would help government, concerned agencies, organizations and policy makers to make suitable strategy formulation for successful adoption of SMS in Indian SMEs.