The Indian food processing industry is one of the largest in the world in terms of production, consumption, exports and growth opportunities. Small and medium-sized enterprises (SMEs) play a crucial role in this. Large manufacturing firms mainly dominate innovation studies in India. This chapter sets out to answer the important questions as to how SMEs manage innovation, given their limitations in resources, and as to what are the factors which affect innovation performance, given the resource constraints. To secure a meaningful answer to the research questions, this study considers the case of a medium-sized enterprise in the south Indian state of Kerala called ‘Canning Industries – Cochin’. The study results identify five major factors that affect innovation performance, namely technology, the labor market, financial resources, top management commitment, and customer and supplier relationships. Key words: food processing industry, SMEs, innovation performance, top management commitment, labor market, customer-supplier relationship.