Characteristics of Foreign Direct Investment

Foreign Direct Investment (FDI) represents an equity investment by a foreign entity in the business operations of a domestic company. Since it involves taking an ownership stake rather than issuing loans, it does not create debt for the receiving country and avoids mandatory debt-servicing. FDI can be made in unlisted companies as well, making option 'a' incorrect. FIIs investing in government securities falls under portfolio investment (FPI), not FDI. > One-line conceptual takeaway: FDI is a long-term, non-debt creating equity capital flow that establishes a lasting interest in a foreign enterprise. Answer: (b).