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Definition: Foreign Market Value
Foreign market value is defined as the value of an entity in the domestic market of the country which exports it. At times, foreign market value is based on the prices in a country other than the exporting and importing countries. This is the price based definition of foreign market value. It can also have a cost based definition under which the Commerce department calculates Foreign Market Value of merchandise by summing up its manufacturing cost, packaging cost, profit on home market sales as well as general expenses. This value is generally used to detect the instance of dumping i.e. when a country exports goods at prices lower than that in its home market.
Eg – Suppose that a made in China toy car is sold in Chinese markets at 15 Yuan (INR 130). If China exports it to India and sells it at INR 125, then this is an example of dumping as the selling price in the Indian market is less than the Foreign Market Value of INR 130.