This research examines the impact of digitalization on the development of small and medium enterprises (SMEs) in Kerala, India. Digitalization, a key driver of today's business transformation, improves productivity, efficiency, and customer experience, which are critical for SMEs in developing countries like India. This research aims to assess how digital technologies impact the growth and competitiveness of SMEs in Kerala. Using qualitative and quantitative data processing methods, including literature analysis and a survey questionnaire, the research analyzes data using SPSS descriptive statistics, reliability testing, and factor analysis. The methodology involves developing a survey questionnaire distributed to 81 leading SME owners and heads of various departments from Kerala. The data obtained from 60 respondents shows a significant understanding of the benefits and challenges of digitalization. The factor analysis identified eight key factors influencing the digitalization of SMEs, including innovation, leadership, technology management, workforce efficiency, and global knowledge transfer. The research results showed the importance of using digital technologies to improve user experience and mobile security and expand market reach, thereby improving the overall performance of SMEs in India's dynamic economy