Despite different international and national interventions to promote the textile sector, studies have shown that the response in terms of innovation and competitiveness though positive does not seem to match with expectations. This paper explores and discusses innovation for competitiveness scenario based on an ongoing research in Morogoro Canvas Mill using cross sectional case study design. The objective of the research was, and is, to identify and assess innovative practices and challenges facing the Canvas Mill in the process of striving for competitiveness. At this level, the paper uses data which was obtained from in-depth interviews involving heads of departments. The discussion is led by descriptive content analysis technique. The major findings centre around the following areas: Local modification of spare parts to suit obsolete machinery, development of better cloth quality and designs based on imitation, development of new business lines. However, the Ujamaa legacy, inadequate support and government bureaucracy, fear to take risks and inadequate capital are challenges that have to be tackled in order to benefit fully from the emerging local and global business opportunities. The initial plausible conclusion is that in order to acquire sufficient capital and sustain effective innovations, manufacturing firms should strive for more foreign-local partnership in manufacturing and marketing.