Gift incorporating a ship's instrument (7)
I believe the answer is:
bassoon
'instrument' is the definition.
(bassoon is a kind of instrument)
'gift incorporating a ship's' is the wordplay.
'gift' becomes 'boon' (I've seen this before).
'incorporating' means one lot of letters goes inside another.
'ship' becomes 'ss'.
'a'+'ss'='ass'
'boon' enclosing 'ass' is 'BASSOON'.
(Other definitions for bassoon that I've seen before include "No, a boss would be a musical instrument" , "So-so ban on the instruments" , "Hollow instrument" , "Double-reed instrument" , "Low wind instrument" .)