Fancy goods initially imported by island state (7)
I believe the answer is:
imagine
'fancy' is the definition.
(thesaurus)
'goods initially imported by island state' is the wordplay.
'initially' says to take the initial letters.
'imported by' indicates putting letters inside.
'island' becomes 'i'.
'state' becomes 'maine' (Maine is an example**).
The initial letter of 'goods' is 'g'.
'i'+'maine'='imaine'
'g' inserted into 'imaine' is 'IMAGINE'.
(Other definitions for imagine that I've seen before include "A Gemini? (anag)" , "Devise" , "Picture in one's mind" , "Reckon" , "Lennon song - dream" .)