Industrial processing of shell fish for human consumption yields around 80% by-products and only 20% edible flesh. The processing of shell fish viz., shrimps, crabs, prawns, squilla etc. results in an immense quantity of by-products which include cephalothorax, shell etc. Every year, thousands of tons of fish by-products of high nutrient content are dumped or discarded by fish processing plants throughout the world.

Traditionally isolation of chitin from crustacean shell waste consists of three basic steps: demineralization, deproteinization, and decolorization. The subsequent conversion of chitin to chitosan (deacetylation) is generally achieved by treatment with concentrated sodium hydroxide solution at 100 ºC or higher to remove some or all of acetyl group from the chitin.