The one-man commission will be given three months to complete its enquiry. The report will be shared with Parliament.
In September last year, the government sanctioned the entry of foreign super-chains like Wal-Mart by allowing 51% Foreign Direct Investment or FDI in multi-brand retail.
The Opposition has been demanding an investigation since November when Wal-Mart, in a disclosure filing in the United States, said that it had spent Rs. 125 crore in the last four years to lobby for "enhanced access" to markets in India and other countries.
Both Wal-Mart and the United States government maintain that the money on lobbying was spent in America, and not in India, where lobbying is illegal.
In November, Wal-Mart informed the US Securities and Exchange Commission that it was investigating potential violations of the US Foreign Corrupt Practices Act in Brazil, China and India, among other markets. The company's joint venture in India - Bharti Wal-Mart - suspended several employees including its Chief Financial Officer as part of an internal corruption investigation.