Directed by Deven Bhojani, the movie, which has been described by Shah as "unique, new and magnificent", stars Vidyut Jamwal in the lead.
"We are very proud to take the film into a sequel. Obviously now we have a bigger responsibility to live up to the challenge of making it bigger and better," Shah said in a statement.
Bhojani shared: "I loved 'Commando' and am glad that I am chosen by Vipul Shah and his partners to direct 'Commando 2'. We have a super talented team of actors and technicians from India and abroad. I am looking forward to starting the shoot today."
Vidyut, who is known for his effortless daredevilry onscreen, said: "Vipul sir is the man who understands action and can make superlative action films. I have seen Deven Bhojani sir's action serial 'Pukar'. I was floored and have been seeing the detailed work he has put in. It is excellent."
Madhu Mantena of Phantom Films, which has coproduced the film, is confident that the sequel "will take things to a whole new level".
"The action adventure will be a treat for all audiences worldwide and we are ecstatic that the film is going on floors," Mantena added.