The development of innovative manufacturing activities and processes in MED Islands can improve their innovation capacities, the diversification of their economy, the qualifications of the jobs offered and has a multiplier effect on all economic activities, while it contributes to a more sustainable use of key natural resources, notably water and energy. However insularity, scarcity of some resources and the need for compatibility with existing activities are constraints for exploiting this potential. SMILIES proposes to apply the “Trans-local Innovation System” concept which links innovation and internationalisation policies to boost regional competitiveness to develop a governance model for MED islands’ industrial innovation development. SMILIES will organise focused actions in concrete cases on the field, from which sustainable policies for islands’ industrial innovation will be defined. The SMILIES workplan follows a 30- month phased schedule, including a pilot phase. Pilot projects’ profiles will be selected after a contextual analysis of 6 opportunity scenarios of use of industrial innovation (to benefit from Tourism, Retail, Agro or Building activities, global niche markets or poorly- served local needs). End results are context and impact analysis tools for setting priorities of MED-Islands industrial innovation regional policies and a sustainable infrastructure and tools to support innovation transfer to entrepreneurs in projects that fit such policies.