It is hard to advise you on how to combine mime and speech. If you are showing him the orange why not also make the sign for 'small' with your fingers? Then you don't even need to speak!
"I need small size of this" and "I need this in small size" are both grammatically incorrect.
British English doesn't use 'need' as often as American English does. So in Britain, if we didn't know the word 'orange', we might ask, "Have you got smaller ones of these?" Or "Do you sell smaller ones of these?" Or perhaps "I'm looking for smaller ones of these." In the US, "I need smaller ones of these" would probably be the way to go.
Remember - there are better ways to say it than any of these.
In Britain most people would ask, "Do you sell smaller oranges?", but you don't want to say 'oranges'! You could hold up an orange and ask, "What is this?" Then, once you've learnt its name, you could ask, "Do you sell smaller oranges?"
The word 'size' is rarely used when buying fruit. We speak of big ones, little ones, large melons, small cucumbers etc. 'Size' IS needed when buying things where precision is needed: clothing, carpets, coffee etc.
"I need these in a smaller size" is something you might say in a shoe shop. We need precision here. You might ask about "size 12 socks" or "socks sized 12". Buying a coat, where the labels say simply 'Large', 'Medium' and 'Small', you might say, "I need this in a small size" or "I need a small-sized one of these", or perhaps even "I need the small size of this."