Water chestnut starch, also referred to as water chestnut flour, or water chestnut powder is extracted from water chestnut (Eleocharis dulcis). The resulting flour (starch) is a slightly coarse looking, greyish color and it is used as a thickener which also adds a sheen to the liquid.
It is also used as a coating for frying and it adds a nice crispy texture to the finished food. It works well for deep fried foods. Water chestnut flour does not blend in water as easily as corn starch.You should pound the starch in a mortar and pestle to break up the clumps before you use. Always add the starch to liquid before adding it to your recipe.
Note water chestnut starch is not the same as "chestnut flour" made from tree chestnuts.
You can typically find this ingredient in most any Asian market. If you can't find you can purchase online from Gourmetsleuth - water chestnut starch.