tell me about smoke system. Is there any separate muffler or want to alter the same one.

http://www.hobbyking.com/hobbyking/store/uh_viewItem.asp?idProduct=7324

Well there is a company which makes muffler with smoke connectors, all you need to do is just connect the pipe from your smoke pump and it start working. Check out the website SLIMLINE, just look for the make of the engine you plan to use smoke with and it will show you the option. Yes there is a home made way also, but I have noticed that it does not work very well. All you need to do is get a 3 or 4 mm brass tube, drill very small random holes in the tube and then insert at least 1 or 2 inch inside the muffler and solder all around, lease at least 10cm so that you can connect the smoke pipe.

I heard there is some oil based smoke pump for electric models...
Any info?

No idea, but I will look on the net and find you some details. As far as my knowledge about smoke is that, hoter the muffler becomes you bet denser and better smoke, bet in case of electric airplanes I have no clue what they use, and how do they heat the smoke liquid before releasing it in the air ?

Here's a link below which would help you to put smoke in electric airplanes:
http://www.rcuniverse.com/magazine/article_display.cfm?article_id=215

Anyone in India selling these?
Any cheaper options abroad??

I don't think so. Use Google to search, I guess that the best.