dhonu121 wrote:During the past decade, the labor market in France has not been operating according to free market principles, but instead stifling functioning through its various government regulations restricting the hiring and firing of workers.

(A) principles, but instead stifling functioning through its various government regulations restricting the hiring and firing of workers
(B) principles, instead it has been functioning in a stifled manner as a result of various government regulations that restrict the hiring and firing of workers
(C) principles, rather functioning despite being stifled as a result of government regulations that variously restrict worker hiring and firing
(D) principles; the hiring and firing of workers is restricted there by various government regulations, its functioning being stifled
(E) principles; instead, its functioning has been stifled by various government regulations restricting the hiring and firing of workers

OA:E

My problem: We use semicolon if:
a. We need to connect two related thoughts.
b. The second thought is able to stand alone as a sentence, having its subject and verb.

In E above, a) is met but not b).
If a sentence starts with instead, how can it be an independent clause ?
Also,
What is wrong with other answer choices A and B ?

In B, COMMA + instead incorrectly serves to connect two complete clauses. Instead is not a conjunction but an ADVERB; it cannot serve to connect two independent clauses. Eliminate B.

Here, instead serves as an adverb modifying the following clause.