Digital transformation (DT) is a strategic imperative for small and medium enterprises (SMEs) in India seeking competitiveness, resilience and new revenue streams. This paper examines drivers, barriers and outcomes of DT in Indian SMEs and proposes a practical, phased framework that links strategic intent, capability building, and execution mechanisms to measurable innovation outcomes. Drawing on a structured synthesis of recent literature and practitioner reports, the study identifies leadership vision, digital skills, data governance, and affordable technology stacks as primary enablers; while legacy processes, resource constraints, and skill gaps emerge as persistent barriers. The proposed framework recommends pilot based experimentation, dual metrics (efficiency + innovation), and a lightweight governance model to scale validated initiatives. Practical recommendations include an SME digital maturity checklist, a capability building roadmap, and policy oriented suggestions to improve access to finance and training. The paper concludes with propositions for empirical testing in Indian SME contexts.