Correct Option (B):
Foreign Direct Investment (FDI) represents an investment by a foreign entity directly into the productive assets of a domestic enterprise, typically involving a lasting interest and often a degree of management control. This form of capital inflow is considered non-debt creating because it involves equity participation rather than loans, thereby not incurring interest payments or repayment obligations. It contributes to the capital base of the host country without adding to its external debt liabilities.
Incorrect Options:
Option (A): FDI can be made into both listed and unlisted companies. The characteristic of being listed is not a prerequisite for an investment to be classified as FDI. FDI focuses on establishing a lasting interest and control, irrespective of the company's listing status.
Option (C): FDI, being an equity investment, does not involve debt servicing. Debt servicing, which includes interest payments and principal repayments, is characteristic of debt instruments such as foreign loans, bonds, or external commercial borrowings.
Option (D): Investments made by foreign institutional investors in government securities are typically classified as Foreign Portfolio Investment (FPI) rather than FDI. FPI is characterized by a short-term perspective and lack of management control, primarily aiming for capital gains or dividends from marketable securities.