Explain why subsidies are added to and indirect taxes deducted from domestic product at market price to arrive at domestic product and factor cost.

And also,
Subsidies by government are grants that decrease the factor price of a commodity, whereas, indirect taxes are paid by a firm and households that increase the final factor price of a commodity. Hence, to derive Gross Domestic Product at Factor Cost from Gross Domestic Product at Market Price, we deduct indirect taxes and add subsidies

When we talk about Factor cost, it just means the amount on which the good has been produced but when a product is sold in the market then government imposes some tax on that product which increases its price, government also provide subsidies to poor section of the society due to which they get the product at a lower price (hence value of product decreases)

So simply, FC + tax - subsidies = Market Price

which implies, Market Price + subsidies - tax = Factor cost

.Explain why subsidies are added to and indirect taxes deducted from domestic product at market price to arrive at domestic product at factor cost