That's an electric sitar (through a phaser? )
...you can see it the the band of gold vid at 2:25
[youtube]_65LLafsa9g[/youtube]
I bought an Italia version...its a POS
The danelectro's maybe are better.
I just saw this recently :
http://www.activemusician.com/item--MD. ... Rosul%2C+D
I haven't found any pedals that can do it well, but I haven't searched for a while.. I had an older Zoom 505 multi-effects pedal that had a Sitar setting.
A quick search brings these up : Danelectro's Sitar Swami, Digitech's The Weapon and the Boss GT8 Guitar Multi-Effect Pedal Board.
Let us know if you find something good,