Steel instrument with built-in retro microphone (8)
I believe the answer is:
scimitar
'steel' is the definition.
(I've seen this before)
'instrument with built-in retro microphone' is the wordplay.
'instrument' becomes 'sitar' (musical instrument).
'with' means one lot of letters goes inside another.
'built in retro microphone' becomes 'cim' (I can't explain this - if you can you should believe this answer much more).
'sitar' going around 'cim' is 'SCIMITAR'.
Can you help me to learn more?
(Other definitions for scimitar that I've seen before include "Short curved oriental sword" , "Curved form of sword" , "I'm racist, owning an oriental sword" , "Curved oriental sabre" , "sharp weapon" .)